Sheridan Industries must decide whether to make-or-buy some of its components. The costs of producing 161000 battery packs for its product are as follows: Direct Materials $13800 Direct Labor $4600 Variable overhead $5520 Fixed overhead $8280 The company has an opportunity to purchase the battery packs for $0.18 per unit, which would eliminate all variable costs, and $1840 of fixed costs. Based on your analysis, what is the net income increase or decrease if the company purchases the battery packs? ○ An increase in net income of $3220. ○ A decrease in net income of $3220. ○ An increase in net income of $6440. O An increase in net income of $5060.

Sheridan Industries must decide whether to make-or-buy some of its components. The costs of producing 161000 battery packs for its product are as follows: Direct Materials $13800 Direct Labor $4600 Variable overhead $5520 Fixed overhead $8280 The company has an opportunity to purchase the battery packs for $0.18 per unit, which would eliminate all variable costs, and $1840 of fixed costs. Based on your analysis, what is the net income increase or decrease if the company purchases the battery packs? ○ An increase in net income of $3220. ○ A decrease in net income of $3220. ○ An increase in net income of $6440. O An increase in net income of $5060.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...

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