Notson, Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Notson for $420 each. Notson needs 1,200 clocks annually. Notson has provided the following unit costs for its commercial clocks: Direct materials Direct labor Variable overhead Fixed overhead (40% avoidable) $100 140 80 150 What is the incremental effect on net income if Notson choses to outsource the production of the 1,000 clocks annually? Should Notson make or buy the clocks?
Notson, Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Notson for $420 each. Notson needs 1,200 clocks annually. Notson has provided the following unit costs for its commercial clocks: Direct materials Direct labor Variable overhead Fixed overhead (40% avoidable) $100 140 80 150 What is the incremental effect on net income if Notson choses to outsource the production of the 1,000 clocks annually? Should Notson make or buy the clocks?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Notson, Inc. produces several models of clocks. An outside supplier has offered to produce the
commercial clocks for Notson for $420 each. Notson needs 1,200 clocks annually. Notson has provided
the following unit costs for its commercial clocks:
Direct materials
Direct labor
Variable overhead
Fixed overhead (40%
avoidable)
$100
140
80
150
What is the incremental effect on net income if Notson choses to outsource the production of the
1,000 clocks annually?
Should Notson make or buy the clocks?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa49c3c21-67f0-4ee5-bc25-5b0fd0c4f3f2%2Fc6063407-80e0-4426-83bd-b39d6b78bcdb%2Fz0b9w2l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Notson, Inc. produces several models of clocks. An outside supplier has offered to produce the
commercial clocks for Notson for $420 each. Notson needs 1,200 clocks annually. Notson has provided
the following unit costs for its commercial clocks:
Direct materials
Direct labor
Variable overhead
Fixed overhead (40%
avoidable)
$100
140
80
150
What is the incremental effect on net income if Notson choses to outsource the production of the
1,000 clocks annually?
Should Notson make or buy the clocks?
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