IT Company is operating at 70% capacity. The plant manager is considering making Part ROQ now being purchased from outside supplier for P110 each, a price that is projected to increase in the near future. The plant has the equipment and labor force required to manufacture Part ROQ. The designer engineer estimates that each part requires P40 of direct materials and P30 of direct labor. The plant overhead is 200% of direct labor peso cost, and 40% of the overhead is fixed cost. A decision to manufacture Part ROQ will result in a gain or (loss) for each component of: A.P26 B.P16 C.(P20) D.P4
IT Company is operating at 70% capacity. The plant manager is considering making Part ROQ now being purchased from outside supplier for P110 each, a price that is projected to increase in the near future. The plant has the equipment and labor force required to manufacture Part ROQ. The designer engineer estimates that each part requires P40 of direct materials and P30 of direct labor. The plant overhead is 200% of direct labor peso cost, and 40% of the overhead is fixed cost. A decision to manufacture Part ROQ will result in a gain or (loss) for each component of: A.P26 B.P16 C.(P20) D.P4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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IT Company is operating at 70% capacity. The plant manager is considering making Part ROQ now being purchased from outside supplier for P110 each, a price that is projected to increase in the near future. The plant has the equipment and labor force required to manufacture Part ROQ. The designer engineer estimates that each part requires P40 of direct materials and P30 of direct labor. The plant
A.P26
B.P16
C.(P20)
D.P4
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