Ortega Industries manufactures 20,250 components per year. The manufacturing cost of the components was determined to be as follows: $ 180,000 390,000 105,000 270,000 $ 945,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total Assume Ortega industries could avoid $115,000 of fixed manufacturing overhead if it purchases the component from an outside supplier. An outside supplier has offered to sell the component for $34. If Ortega purchases the component from the supplier instead of manufacturing it, the effect on income would be a Multiple Choice $609,000 increase. $101,500 increase

Ortega Industries manufactures 20,250 components per year. The manufacturing cost of the components was determined to be as follows: $ 180,000 390,000 105,000 270,000 $ 945,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total Assume Ortega industries could avoid $115,000 of fixed manufacturing overhead if it purchases the component from an outside supplier. An outside supplier has offered to sell the component for $34. If Ortega purchases the component from the supplier instead of manufacturing it, the effect on income would be a Multiple Choice $609,000 increase. $101,500 increase

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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