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VaughnCo. produces 5400 units of part Alpha-E for use in one its products. The following costs are incurred at that level of production: Direct materials $58000 Direct labor 170000 Variable overhead 85000 Fixed overhead 168000 If Vaughn buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. The outside supplier has offered to sell the units at $64 per unit. The increase (decrease) in net income from purchasing the part from the outside supplier would be $12400 decrease $12400 increase $79600 decrease O $74600 increase

VaughnCo. produces 5400 units of part Alpha-E for use in one its products. The following costs are incurred at that level of production: Direct materials $58000 Direct labor 170000 Variable overhead 85000 Fixed overhead 168000 If Vaughn buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. The outside supplier has offered to sell the units at $64 per unit. The increase (decrease) in net income from purchasing the part from the outside supplier would be $12400 decrease $12400 increase $79600 decrease O $74600 increase

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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VaughnCo. produces 5400 units of part Alpha-E for use in one its products. The following costs are incurred at that level of production: Direct materials $58000 Direct labor 170000 Variable overhead 85000 Fixed overhead 168000 If Vaughn buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. The outside supplier has offered to sell the units at $64 per unit. The increase (decrease) in net income from purchasing the part from the outside supplier would be $12400 decrease $12400 increase $79600 decrease O $74600 increase
Transcribed Image Text:VaughnCo. produces 5400 units of part Alpha-E for use in one its products. The following costs are incurred at that level of production: Direct materials $58000 Direct labor 170000 Variable overhead 85000 Fixed overhead 168000 If Vaughn buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. The outside supplier has offered to sell the units at $64 per unit. The increase (decrease) in net income from purchasing the part from the outside supplier would be $12400 decrease $12400 increase $79600 decrease O $74600 increase
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