Harmony is currently producing 100 units of a necessary component part by incurring $60,000 in direct materials, $12,500 in direct labour, $22,500 in variable overhead, and $15,000 in fixed overhead. If Harmony purchases the component externally, $10,000 of fixed costs can be avoided. What is the external price where the company is indifferent between buying and selling? O $950 O $1,050 O $1,000 O $1,100 4

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Harmony is currently producing 100 units of a necessary component part by incurring $60,000 in direct materials, $12,500 in direct
labour, $22,500 in variable overhead, and $15,000 in fixed overhead. If Harmony purchases the component externally, $10,000 of
fixed costs can be avoided. What is the external price where the company is indifferent between buying and selling?
$950
$1,050
O $1,000
O $1,100
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Transcribed Image Text:Harmony is currently producing 100 units of a necessary component part by incurring $60,000 in direct materials, $12,500 in direct labour, $22,500 in variable overhead, and $15,000 in fixed overhead. If Harmony purchases the component externally, $10,000 of fixed costs can be avoided. What is the external price where the company is indifferent between buying and selling? $950 $1,050 O $1,000 O $1,100 Save for Later Submit Answer
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