Gordon Corporation produced 10,000 digital watches in the current year. Variable costs are $8 per watch. Overhead assigned is $2.25 per watch. A supplier offers the watches for $9.50 each. Gordon's production manager reports the incremental overhead is $1.25 per watch. Gordon should: a.Continue making the watches as an additional $1.50 per watch would be incurred if bought from the supplier. b.Buy the watches as they would save $0.75 per watch. c.Buy the watches as they would save $1.50 per watch. d.Buy the watches as they would save $1.75 per watch. e.Continue making the watches as an additional $0.25 per watch would be incurred if bought from the supplier.

Gordon Corporation produced 10,000 digital watches in the current year. Variable costs are $8 per watch. Overhead assigned is $2.25 per watch. A supplier offers the watches for $9.50 each. Gordon's production manager reports the incremental overhead is $1.25 per watch. Gordon should: a.Continue making the watches as an additional $1.50 per watch would be incurred if bought from the supplier. b.Buy the watches as they would save $0.75 per watch. c.Buy the watches as they would save $1.50 per watch. d.Buy the watches as they would save $1.75 per watch. e.Continue making the watches as an additional $0.25 per watch would be incurred if bought from the supplier.

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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