Question
The Cornell Milling Company manufactures an intermediate product identified as Z1. Variable manufacturing costs per unit of Z1 are as follows Direct materials $ 15
The Cornell Milling Company manufactures an intermediate product identified as Z1. Variable manufacturing costs per unit of Z1 are as follows
Direct materials | $ 15 |
Direct labor | $5 |
Manufacturing overhead | $8 |
Ithaca Tools has offered to sell Cornell Milling 10,000 units of Z1 for $40 per unit. If Cornell Milling accepts the offer, $50,000 of fixed manufacturing overhead will be eliminated. Applying differential analysis to the situation, Cornell Milling should
Group of answer choices
make Z1: the saving is $70,000
make Z1: the saving is $120,000
buy Z1: the saving is $120,000
buy Z1: the saving is $70,000
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