During 2010, America, Inc., produced, among other products, 9,500 cameras, incur

Question

During 2010, America, Inc., produced, among other products, 9,500 cameras, incurring the following unit costs: $5 in direct materials, $3 in direct labor, $2 in variable overhead, $4 in fixed overhead, $0.50 in variable selling and administrative expenses, and $1 in fixed selling and administrative expenses. An outsider had offered to produce the cameras for $12 each. Assuming that the factory space would have been idle otherwise, acceptance of the outside offer would have A. lost the company $9,500. B. saved the company $34,250. C. saved the company $19,250. D. lost the company $14,250.

Explanation / Answer

C. saved the company $19,250.

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