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2. Elm Paper Corporation manufactures 20,000 rolls of paper each period. The paper is used as an input for producing several other products that Elm manufactures. The full manufacturing costs for a batch of 100 rolls of paper are as follows: Direct materials $ 270 Direct labor 200 Variable manufacturing overhead 200 Average fixed manufacturing overhead 375 Total $1,045 The fixed manufacturing overhead is comprised of depreciation expenses related to prior investments in facilities and equipment that are used in the manufacturing of the paper. These assets have no other use than for the manufacturing of the paper. An outside supplier has offered to sell Elm the 20,000 rolls of paper necessary to meet production needs this period for a lump-sum of $145,000. What should Elm do if it wants to maximize its profit for the period? ?

2. Elm Paper Corporation manufactures 20,000 rolls of paper each period. The paper is used as an input for producing several other products that Elm manufactures. The full manufacturing costs for a batch of 100 rolls of paper are as follows: Direct materials $ 270 Direct labor 200 Variable manufacturing overhead 200 Average fixed manufacturing overhead 375 Total $1,045 The fixed manufacturing overhead is comprised of depreciation expenses related to prior investments in facilities and equipment that are used in the manufacturing of the paper. These assets have no other use than for the manufacturing of the paper. An outside supplier has offered to sell Elm the 20,000 rolls of paper necessary to meet production needs this period for a lump-sum of $145,000. What should Elm do if it wants to maximize its profit for the period? ?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2. Elm Paper Corporation manufactures 20,000 rolls of paper each period. The paper is used as an input for producing several other products that Elm manufactures. The full manufacturing costs for a batch of 100 rolls of paper are as follows: Direct materials $ 270 Direct labor 200 Variable manufacturing overhead 200 Average fixed manufacturing overhead 375 Total $1,045 The fixed manufacturing overhead is comprised of depreciation expenses related to prior investments in facilities and equipment that are used in the manufacturing of the paper. These assets have no other use than for the manufacturing of the paper. An outside supplier has offered to sell Elm the 20,000 rolls of paper necessary to meet production needs this period for a lump-sum of $145,000. What should Elm do if it wants to maximize its profit for the period? ?
Transcribed Image Text:2. Elm Paper Corporation manufactures 20,000 rolls of paper each period. The paper is used as an input for producing several other products that Elm manufactures. The full manufacturing costs for a batch of 100 rolls of paper are as follows: Direct materials $ 270 Direct labor 200 Variable manufacturing overhead 200 Average fixed manufacturing overhead 375 Total $1,045 The fixed manufacturing overhead is comprised of depreciation expenses related to prior investments in facilities and equipment that are used in the manufacturing of the paper. These assets have no other use than for the manufacturing of the paper. An outside supplier has offered to sell Elm the 20,000 rolls of paper necessary to meet production needs this period for a lump-sum of $145,000. What should Elm do if it wants to maximize its profit for the period? ?
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