Cotton Corporation currently makes 13,400 subcomponents a year in one of its factories. The unit costs to produce the subcomponent are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost Cost per Unit $ 32 33 20 12 $ 97 An outside supplier has offered to provide Cotton with the 13,400 subcomponents at an $97.00 per-unit price. No portion of fixed overhead is avoidable. If Cotton accepts the outside offer, what will be the effect on short-term profits? Multiple Choice О $160,800 increase $112 000 incrosco
Cotton Corporation currently makes 13,400 subcomponents a year in one of its factories. The unit costs to produce the subcomponent are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost Cost per Unit $ 32 33 20 12 $ 97 An outside supplier has offered to provide Cotton with the 13,400 subcomponents at an $97.00 per-unit price. No portion of fixed overhead is avoidable. If Cotton accepts the outside offer, what will be the effect on short-term profits? Multiple Choice О $160,800 increase $112 000 incrosco
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter7: Proudction Costs
Section: Chapter Questions
Problem 8SQP
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Transcribed Image Text:Cotton Corporation currently makes 13,400 subcomponents a year in one of its factories. The unit costs to produce the subcomponent are:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Total unit cost
Cost per Unit
$ 32
33
20
12
$ 97
An outside supplier has offered to provide Cotton with the 13,400 subcomponents at an $97.00 per-unit price. No portion of fixed overhead is
avoidable. If Cotton accepts the outside offer, what will be the effect on short-term profits?
Multiple Choice
О
$160,800 increase
$112 000 incrosco
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