Manor, Inc. currently manufactures 1,000 subcomponents per month in one of its factories. The unit costs to produce the subcomponents are: Per unit Direct materials $ 19 Direct labor 54 Variable manufacturing overhead 41 Fixed manufacturing overhead 48 Total unit cost $ 162 Manor is considering purchasing the subcomponents from an outside supplier, who normally charges $170 per unit. The supplier also has an "Exclusive Buyer's Club" which costs $17,000 per month to join, but whose members can purchase the subcomponents for $120 per unit. Fixed overhead is not avoidable. If Manor chose to purchase the subcomponents using the cheaper of the two buying options, what would be the effect on profit? (Do not round intermediate calculations.) Multiple Choice Increase $168,000 Increase $33,000 Decrease $23,000 Decrease $56,000
Manor, Inc. currently manufactures 1,000 subcomponents per month in one of its factories. The unit costs to produce the subcomponents are: Per unit Direct materials $ 19 Direct labor 54 Variable manufacturing overhead 41 Fixed manufacturing overhead 48 Total unit cost $ 162 Manor is considering purchasing the subcomponents from an outside supplier, who normally charges $170 per unit. The supplier also has an "Exclusive Buyer's Club" which costs $17,000 per month to join, but whose members can purchase the subcomponents for $120 per unit. Fixed overhead is not avoidable. If Manor chose to purchase the subcomponents using the cheaper of the two buying options, what would be the effect on profit? (Do not round intermediate calculations.) Multiple Choice Increase $168,000 Increase $33,000 Decrease $23,000 Decrease $56,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Manor, Inc. currently manufactures 1,000 subcomponents per month in one of its factories. The unit costs to produce the subcomponents are:
| Per unit | |||
| Direct materials | $ |
19 |
|
| Direct labor |
54 |
||
| Variable manufacturing |
41 |
||
| Fixed manufacturing overhead |
48 |
||
| Total unit cost | $ |
162 |
|
Manor is considering purchasing the subcomponents from an outside supplier, who normally charges $170 per unit. The supplier also has an "Exclusive Buyer's Club" which costs $17,000 per month to join, but whose members can purchase the subcomponents for $120 per unit. Fixed overhead is not avoidable. If Manor chose to purchase the subcomponents using the cheaper of the two buying options, what would be the effect on profit? (Do not round intermediate calculations.)
Multiple Choice
-
Increase $168,000
-
Increase $33,000
-
Decrease $23,000
-
Decrease $56,000
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