2. If it costs $100,000 to operate a factory monthly that makes doodads for $42 variable cost each or the company can purchase the doodads for $50 each with no fixed costs what is the difference in monthly cost between the make or buy options if the monthly volume is forecasted to be 10,000 doodads?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Please answer both of the questions.

 

Number of Workers Monthly Fixed Costs Range of Outputs
1 60 0 to 50
3 120 51 to 150
5 200 151 to 250

 

1. Using the table above, what is the break-even point for 3 workers?

  1.

42

  2.

60

  3.

30

  4.

100

 

2. If it costs $100,000 to operate a factory monthly that makes doodads for $42 variable cost each or the company can purchase the doodads for $50 each with no fixed costs what is the difference in monthly cost between the make or buy options if the monthly volume is forecasted to be 10,000 doodads?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education