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Tempura Company produces 2,000 parts each year that are used in one of its products. The unit cost of producing this part is Variable cost P 7.50 Fixed cost 6.00 Total cost P 13.50

Tempura Company produces 2,000 parts each year that are used in one of its products. The unit cost of producing this part is Variable cost P 7.50 Fixed cost 6.00 Total cost P 13.50

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The effect on operating income from making the part would be a

Tempura Company produces 2,000 parts each year that are used in one of its products. The unit cost of producing this part is Variable cost P 7.50 Fixed cost 6.00 Total cost P 13.50 The part can be purchased from an outside supplier at P 10 per unit. If the part is purchased from the outside supplier, one-third of the fixed costs incurred in producing the parts can be eliminated. The effect on operating income from making the part would be a P 3,000 increase O P1,000 increase O P3,000 decrease O P 1,000 decrease
Transcribed Image Text:Tempura Company produces 2,000 parts each year that are used in one of its products. The unit cost of producing this part is Variable cost P 7.50 Fixed cost 6.00 Total cost P 13.50 The part can be purchased from an outside supplier at P 10 per unit. If the part is purchased from the outside supplier, one-third of the fixed costs incurred in producing the parts can be eliminated. The effect on operating income from making the part would be a P 3,000 increase O P1,000 increase O P3,000 decrease O P 1,000 decrease
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