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Mighty Safe Fire Alarm is currently buying 62,000 motherboards from Motherboard, Inc., at a price of $66 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $33 per unit; direct labor, $9 per unit; and variable factory overhead, $15 per unit. Fixed costs for the plant would increase by $85,000. Which option should be selected and why? O make, $473,060 increase in profits Ob buy, $85,000 increase in profits Oe make, $558,000 increase in profits Od. buy, 5473,060 increase in profits

Mighty Safe Fire Alarm is currently buying 62,000 motherboards from Motherboard, Inc., at a price of $66 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $33 per unit; direct labor, $9 per unit; and variable factory overhead, $15 per unit. Fixed costs for the plant would increase by $85,000. Which option should be selected and why? O make, $473,060 increase in profits Ob buy, $85,000 increase in profits Oe make, $558,000 increase in profits Od. buy, 5473,060 increase in profits

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Mighty Safe Fire Alarm is currently buying 62,000 motherboards from Motherboard, Inc., at a price of $66 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $33 per unit; direct labor, $9 per unit; and variable factory overhead, $15 per unit. Fixed costs for the plant would increase by $85,000. Which option should be selected and why? Oa make, $473,060 increase in profits b. buy, $85,000 increase in profits c. make, $558,000 increase in profits Od. buy, $473,060 increase in profits
Transcribed Image Text:Mighty Safe Fire Alarm is currently buying 62,000 motherboards from Motherboard, Inc., at a price of $66 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $33 per unit; direct labor, $9 per unit; and variable factory overhead, $15 per unit. Fixed costs for the plant would increase by $85,000. Which option should be selected and why? Oa make, $473,060 increase in profits b. buy, $85,000 increase in profits c. make, $558,000 increase in profits Od. buy, $473,060 increase in profits
Stryker Industries received an offer from an exporter for 28,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: $25 Domestic unit sales price Unit manufacturing costs: Variable Fixed 9 5 The differential cost from the acceptance of the offer is O $700,000 b. $252,000 $448,000 Od $140,000
Transcribed Image Text:Stryker Industries received an offer from an exporter for 28,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: $25 Domestic unit sales price Unit manufacturing costs: Variable Fixed 9 5 The differential cost from the acceptance of the offer is O $700,000 b. $252,000 $448,000 Od $140,000
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