Wayside, Inc., produces a product that currently sells for $72 per unit. Current production costs per unit include direct materials, $20; direct labor, $24; variable overhead, $10; and fixed overhead, $10. Product engineering has determined that a certain part of the product conversion process could be outsourced for $8 per unit. Raw material costs would not be affected, but direct labor and variable overhead costs would be reduced by 30%. No other opportunity is currently feasible for unused production capacity. How much product cost can Wayside avoid if it outsources part of the conversion process? Multiple Choice $19.20 per unit. $7.20 per unit. $10.20 per unit. $16.20 per unit.
Wayside, Inc., produces a product that currently sells for $72 per unit. Current production costs per unit include direct materials, $20; direct labor, $24; variable overhead, $10; and fixed overhead, $10. Product engineering has determined that a certain part of the product conversion process could be outsourced for $8 per unit. Raw material costs would not be affected, but direct labor and variable overhead costs would be reduced by 30%. No other opportunity is currently feasible for unused production capacity. How much product cost can Wayside avoid if it outsources part of the conversion process? Multiple Choice $19.20 per unit. $7.20 per unit. $10.20 per unit. $16.20 per unit.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Wayside, Inc., produces a product that currently sells for $72 per unit. Current production costs per unit include direct materials, $20; direct labor, $24;
variable overhead, $10; and fixed overhead, $10. Product engineering has determined that a certain part of the product conversion process could be
outsourced for $8 per unit. Raw material costs would not be affected, but direct labor and variable overhead costs would be reduced by 30%. No other
opportunity is currently feasible for unused production capacity. How much product cost can Wayside avoid if it outsources part of the conversion
process?
Multiple Choice
O $19.20 per unit.
$7.20 per unit.
$10.20 per unit.
$16.20 per unit.
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