The following production costs are provided for AudioPro Company, a manufacturer of high-quality headphones.Manufacturing Costs:Direct MaterialsDirect LaborVariable OverheadFixed OverheadTotalIt has been determined that the headphones could be purchased from Integrated Labs at a cost of $135 plus $8 shipping costs.Assume 40% of fixed overhead allocated to making headphones relates to a production manager who would not be retained if theheadphones were not produced by AudioPro.Required:a. Considering the offer from Integrated Labs, show whether AudioPro should make or buy the product.b. How would your analysis change if AudioPro could use capacity resources for alternative activities that would produce acontribution of $35 per unit?$ 60382250$ 170Complete this question by entering your answers in the tabs below.Required A Required BHow would your analysis change if AudioPro could use capacity resources for alternative activities that would produce acontribution of $35 per unit?Purchase Cost:Cost of HeadphonesShipping CostManufacturing Cost:AudioPro CompanyOpportunity cost of using available resourcesTotal relevant costsHEMEAvoidable costto makeSCost to buy4

Costs: = Materials t Labor ole Overhead Overhead $ 60 38 22 50 $ 170 een determined that the headphones could be purchased from Integrated 40% of fixed overhead allocated to making headphones relates to a prod Ones were not produced by AudioPro. dering the offer from Integrated Labs, show whether AudioPro should ma would your analysis change if AudioPro could use capacity resources for a

Costs: = Materials t Labor ole Overhead Overhead $ 60 38 22 50 $ 170 een determined that the headphones could be purchased from Integrated 40% of fixed overhead allocated to making headphones relates to a prod Ones were not produced by AudioPro. dering the offer from Integrated Labs, show whether AudioPro should ma would your analysis change if AudioPro could use capacity resources for a

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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