38. The company decides to purchase the part for P8 per unit from another supplier and rents its idle capacity for P5,000/month. How will the company's monthly costs change? 38. A company is considering outsourcing one of the component parts for its product. The company currently makes 10,000 parts per month. Current costs are as follows: Per unit Direct materials P4 P40,000 Direct labor 3 30,000 Fixed plant facility cost 2 20,000 O a. Decrease P15,000. O b. Decrease P10,000. Oc. Increase P5,000. d. Increase P10,000. 27

38. The company decides to purchase the part for P8 per unit from another supplier and rents its idle capacity for P5,000/month. How will the company's monthly costs change? 38. A company is considering outsourcing one of the component parts for its product. The company currently makes 10,000 parts per month. Current costs are as follows: Per unit Direct materials P4 P40,000 Direct labor 3 30,000 Fixed plant facility cost 2 20,000 O a. Decrease P15,000. O b. Decrease P10,000. Oc. Increase P5,000. d. Increase P10,000. 27

Name: 38. The company decides to purchase the part for P8 per unit from ano
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Description: 38. The company decides to purchase the part for P8 per unit from anothersupplier and rents its idle capacity for P5,000/month. How will thecompany's monthly costs change?38 A company is considering outsourcing one of the component parts for its pro

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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A company is looking to launch a new product line, which requires new facilities to be used and at the moment has two planned products, called ‘Basic’ and ‘Super’. The cost per unit is planned as follows: Basic Super Direct materials £20 £24 Direct labour £14 £16 While using the absorption costing approach, the company uses machine hours as the basis to charge its production overheads. One unit of Basic will use 3 machine hours while one unit of Super will use 4 machine hours. The business sells these products at a price that gives a standard profit mark-up of 30% of full cost. For the coming year, the company expects to make and sell 8,000 units of Basic and 6,000 units of Super. If the company adopts the ABC approach, the details relating to the…
How to answer the variable rate per unit?
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