The effect on operating income from making the part would be a Tempura Company produces 2,000 parts each year that are used in oneof its products. The unit cost of producing this part isVariable costP 7.50Fixed cost6.00Total costP 13.50The part can be purchased from an outside supplier at P 10 per unit. Ifthe part is purchased from the outside supplier, one-third of the fixedcosts incurred in producing the parts can be eliminated. The effect onoperating income from making the part would be aP 3,000 increaseO P1,000 increaseO P3,000 decreaseO P 1,000 decrease

An accounting method which determines the value of profit which is realized from a operations of…

Answered: Tempura Company produces 2,000 parts…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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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

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