Gradebook ORION Dowaloadable eTextbook nes 08:24 PM / Ramanngi 37 mn. Question 1
ID: 2516296 • Letter: G
Question
Gradebook ORION Dowaloadable eTextbook nes 08:24 PM / Ramanngi 37 mn. Question 1 Bonita Industries produces 5000 units of part A12E. The fellowing coots were incurred for that level of production Direct materials Direct labor Variable overhead Fixed overhead 60000 165000 175000 if Bonita buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. If the outside supplier offers a unit price of $73, net income will increase (decrease) by $(60000). $85000 O $(15000). $145000. Click if you would like to Show Work for this question: een h.ors Question Attempts: G e 300-3018 ere to search 8 7 8 9 0 3 4 5 6Explanation / Answer
Make:
Direct Materials = $60,000
Direct Labor = $165,000
Variable Overhead = $80,000
Avoidable Fixed Overhead = $45,000
Relevant Cost = Direct Materials + Direct Labor + Variable Overhead + Avoidable Fixed Overhead
Relevant Cost = $60,000 + $165,000 + $80,000 + $45,000
Relevant Cost = $350,000
Buy:
Number of units purchased = 5,000
Unit Price = $73
Total Cost = Number of units purchased * Unit Price
Total Cost = 5,000 * $73
Total Cost = $365,000
Increase in Cost = $365,000 - $350,000
Increase in Cost = $15,000
So, net income will decrease by $15,000 if Bonita purchase from outside instead of making them.
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