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Novak Manufacturing incurs unit costs of $7.00 ($5.00 variable and $2.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 12,500 of the parts for $5.60 per unit. If it accepts the offer, Novak will save all variable costs and $1.00 of fixed costs. Prepare an analysis showing the total cost savings, if any, that Novak will realize by buying the part. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g.-15,000 or parenthesis, e.g. (15,000).) Number of units: The decision should be to < < > < $ Per Unit $ $ Make

Novak Manufacturing incurs unit costs of $7.00 ($5.00 variable and $2.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 12,500 of the parts for $5.60 per unit. If it accepts the offer, Novak will save all variable costs and $1.00 of fixed costs. Prepare an analysis showing the total cost savings, if any, that Novak will realize by buying the part. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g.-15,000 or parenthesis, e.g. (15,000).) Number of units: The decision should be to < < > < $ Per Unit $ $ Make

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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Novak Manufacturing incurs unit costs of $7.00 ($5.00 variable and $2.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 12,500 of the parts for $5.60 per unit. If it accepts the offer, Novak will save all variable costs and $1.00 of fixed costs. Prepare an analysis showing the total cost savings, if any, that Novak will realize by buying the part. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Number of units: The decision should be to < < $ Per Unit LA GA Make
Transcribed Image Text:Novak Manufacturing incurs unit costs of $7.00 ($5.00 variable and $2.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 12,500 of the parts for $5.60 per unit. If it accepts the offer, Novak will save all variable costs and $1.00 of fixed costs. Prepare an analysis showing the total cost savings, if any, that Novak will realize by buying the part. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Number of units: The decision should be to < < $ Per Unit LA GA Make
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