Cotton Corp. currently makes 10,000 subcomponents a year in one of its factories. The unit costs to produce are: Per unit Direct materials $ 27.00 Direct labor 26.00 Variable manufacturing overhead 23.00 Fixed manufacturing overhead 10.00 Total unit cost $ 86.00 An outside supplier has offered to provide Cotton Corp. with the 10,000 subcomponents at an $99.00 per unit price. Fixed overhead is not avoidable. What is the maximum price Cotton Corp. should pay the outside supplier? Multiple Choice $37.00 $86.00 $99.00 $76.00
Cotton Corp. currently makes 10,000 subcomponents a year in one of its factories. The unit costs to produce are: Per unit Direct materials $ 27.00 Direct labor 26.00 Variable manufacturing overhead 23.00 Fixed manufacturing overhead 10.00 Total unit cost $ 86.00 An outside supplier has offered to provide Cotton Corp. with the 10,000 subcomponents at an $99.00 per unit price. Fixed overhead is not avoidable. What is the maximum price Cotton Corp. should pay the outside supplier? Multiple Choice $37.00 $86.00 $99.00 $76.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cotton Corp. currently makes 10,000 subcomponents a year in one of its factories. The unit costs to produce are:
Per unit | |||
Direct materials | $ |
27.00 |
|
Direct labor |
26.00 |
||
Variable manufacturing |
23.00 |
||
Fixed manufacturing overhead |
10.00 |
||
Total unit cost | $ |
86.00 |
|
An outside supplier has offered to provide Cotton Corp. with the 10,000 subcomponents at an $99.00 per unit price. Fixed overhead is not avoidable. What is the maximum price Cotton Corp. should pay the outside supplier?
Multiple Choice
-
$37.00
-
$86.00
-
$99.00
-
$76.00
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