It is estimated that 20% of the fixed overhead costs assigned to TE456 will no longer be incurred, if the company purchases Company now has the option of purchasing the part from an outside supplier at $89 per unit. If Konrade's Engine Company accepts the offer from the outside supplier, what is the monthly total avoidable costs (i.e. costs that will no longer be incurred)? O A. $80,000 O B. $84,000 O C. $96,000 O D. $100,000
It is estimated that 20% of the fixed overhead costs assigned to TE456 will no longer be incurred, if the company purchases Company now has the option of purchasing the part from an outside supplier at $89 per unit. If Konrade's Engine Company accepts the offer from the outside supplier, what is the monthly total avoidable costs (i.e. costs that will no longer be incurred)? O A. $80,000 O B. $84,000 O C. $96,000 O D. $100,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject :- Account
Transcribed Image Text:QUESTION 52
Answer the following questions using the information below:
Konrade's Engine Co. currently manufactures part TE456. Monthly production costs for 1,000 units are:
Direct materials
Direct labor
Variable overhead costs
Fixed overhead costs
Total costs
$40,000
10,000
30,000
20,000
$100,000
2
It is estimated that 20% of the fixed overhead costs assigned to TE456 will no longer be incurred, if the company purchases TE456 from the outside supplier. Konrade's Engine
Company now has the option of purchasing the part from an outside supplier at $89 per unit.
If Konrade's Engine Company accepts the offer from the outside supplier, what is the monthly total avoidable costs (i.e. costs that will no longer be incurred)?
OA. $80,000 O B. $84,000 O C. $96,000 O D. $100,000
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