Frederick Co. is thinking about having one of its products manufactured by an outside supplier. Currently, the cost of manufacturing 5,000 units is: Direct material$62,000 Direct labor 47,000 Variable factory overhead 38,000 Factory overhead 52,000 If Frederick can buy 5,000 units from an outside supplier for $130,000, it should:
A. Buy the product because total fixed and variable manufacturing costs are greater than $130,000.
B. Buy the product because the total incremental costs of manufacturing are greater than $130,000.
C. Make the product because the cost of direct material plus direct labor of manufacturing is less than $130,000.
D. Make the product because current factory overhead is less than $130,000.
E. Make the product because factory overhead is a sunk cost.
Answer: B
You might also like to view...
Communication as ______ views communication as a one-way transfer of information in which a source sends a message through a channel or a medium to a receiver.
a. transaction b. interaction c. transmission d. social construction
A company had a tractor destroyed by fire. The tractor originally cost $131,000 with accumulated depreciation of $65,400. The proceeds from the insurance company were $26,000. The company should recognize:
A. A gain of $39,600. B. A gain of $65,600. C. A gain of $26,000. D. A loss of $39,600. E. A loss of $65,600.
A ________ is an up-and-down repetitive movement that repeats itself over a time span of more than 1 year
A) prediction B) seasonal pattern C) trend D) cyclical pattern
______________________________ involves the creation of roles, processes, and formal reporting relationships in an organization.
Fill in the blank(s) with the appropriate word(s).