Incremental future revenue Incremental future costs Direct materials Direct manufacturing labor Variable overhead (utilities and electricity) Materials-handling and setup overheads Incremental future operating income 3,400,000 1,000,000 600,000 500,000 8,000,000 5,500,000 2,500,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Incremental future revenue
Incremental future costs
Direct materials
Direct manufacturing labor
Variable overhead (utilities and electricity)
Materials-handling and setup overheads
Incremental future operating income
Relevant cost:
Make
Buy
Opportunity cost approach
What is the total relevant cost for both alternatives?
Make 17,500,000; Buy 16,000,000
Make 15,000,000; Buy 13,500,000
Make 17,500,000; Buy 2,500,000
None of the other alternatives are correct.
Make 15,000,000; Buy 16,000,000
3,400,000
1,000,000
600,000
500,000
8,000,000
5,500,000
2,500,000
15,000,000
16,000,000
Transcribed Image Text:Incremental future revenue Incremental future costs Direct materials Direct manufacturing labor Variable overhead (utilities and electricity) Materials-handling and setup overheads Incremental future operating income Relevant cost: Make Buy Opportunity cost approach What is the total relevant cost for both alternatives? Make 17,500,000; Buy 16,000,000 Make 15,000,000; Buy 13,500,000 Make 17,500,000; Buy 2,500,000 None of the other alternatives are correct. Make 15,000,000; Buy 16,000,000 3,400,000 1,000,000 600,000 500,000 8,000,000 5,500,000 2,500,000 15,000,000 16,000,000
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