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Based on the above information, how much would Basil save annually if it manufactured in house the sensors it paper from Suffolk? Your answer should represent the total amount for all sensors required for the year.

Based on the above information, how much would Basil save annually if it manufactured in house the sensors it paper from Suffolk? Your answer should represent the total amount for all sensors required for the year.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Basil Industries produces and sells an instrument used in hospital monitoring systems. The instrument uses a sensor the Basil currently purchases from Suffolk Systems. Suffolk charges Basil $98.50 each for the 12,000 sensors Basil requires annually. Basil's engineers believe that it would be possible for Basil to produce the sensor internally. Unit cost estimates to make the sensors are given below: Direct materials Direct labor Manufacturing overhead Total unit cost $33.00 $42.60 $20.40 $96.00 $16.00 of the manufacturing overhead is traceable to sensor production. Of that amount $8.00 represents fixed costs and the remainder of the traceable costs are variable. Each sensor requires 1.5 hours of direct labor.. Based on the above information, how much would Basil save annually if it manufactured in house the sensors it purchases. from Suffolk? Your answer should represent the total amount for all sensors required for the year.
Transcribed Image Text:Basil Industries produces and sells an instrument used in hospital monitoring systems. The instrument uses a sensor the Basil currently purchases from Suffolk Systems. Suffolk charges Basil $98.50 each for the 12,000 sensors Basil requires annually. Basil's engineers believe that it would be possible for Basil to produce the sensor internally. Unit cost estimates to make the sensors are given below: Direct materials Direct labor Manufacturing overhead Total unit cost $33.00 $42.60 $20.40 $96.00 $16.00 of the manufacturing overhead is traceable to sensor production. Of that amount $8.00 represents fixed costs and the remainder of the traceable costs are variable. Each sensor requires 1.5 hours of direct labor.. Based on the above information, how much would Basil save annually if it manufactured in house the sensors it purchases. from Suffolk? Your answer should represent the total amount for all sensors required for the year.
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