Mapple, Inc. is a smart phone manufacturer. Each month, to make its smart phones, the firm also produces smart phone screens, each of which are then used in the assembly of each smart phone. The per unit cost for Mapple when it produces 120,000 smart phone screens is as follows: Direct materials $89.50 Direct labor $24.00 Variable OH $13.75 Fixed OH $26.00 Mapple can also purchase the 120,000 smart phone screens from an outside supplier for $145 per smart phone screen. If the screen is purchased from the outside supplier, 75% of the total fixed OH costs incurred in producing the screen can be avoided. Assume that all DM, DL, and Variable OH costs could be avoided if Mapple buys the screens from the outside supplier. The financial advantage (disadvantage) for the company as a result of buying the smart phone screens from the outside supplier is: Group of answer choices $210,000 None of the other answers are correct ($1,350,000) $990,000 (450,000)
Mapple, Inc. is a smart phone manufacturer. Each month, to make its smart phones, the firm also produces smart phone screens, each of which are then used in the assembly of each smart phone. The per unit cost for Mapple when it produces 120,000 smart phone screens is as follows:
|
Direct materials |
$89.50 |
|
Direct labor |
$24.00 |
|
Variable OH |
$13.75 |
|
Fixed OH |
$26.00 |
Mapple can also purchase the 120,000 smart phone screens from an outside supplier for $145 per smart phone screen. If the screen is purchased from the outside supplier, 75% of the total fixed OH costs incurred in producing the screen can be avoided. Assume that all DM, DL, and Variable OH costs could be avoided if Mapple buys the screens from the outside supplier. The financial advantage (disadvantage) for the company as a result of buying the smart phone screens from the outside supplier is:
Group of answer choices
$210,000
None of the other answers are correct
($1,350,000)
$990,000
(450,000)
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