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

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...

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