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Accounting
aughn Music produces 60800 blank CDs on which to record music. The CDs have the following costs Direct Materials $10600 Direct Labour 14800 Variable Overhead 2800 Fixed Overhead 6800 None of Vaughni's foxed overhead costs can be reduced, but another product could be made that would increase the operating income by $4400 if the CDs were acquired externally If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Vaughn would be willing to accept to acquire the 60800 units externally

aughn Music produces 60800 blank CDs on which to record music. The CDs have the following costs Direct Materials $10600 Direct Labour 14800 Variable Overhead 2800 Fixed Overhead 6800 None of Vaughni's foxed overhead costs can be reduced, but another product could be made that would increase the operating income by $4400 if the CDs were acquired externally If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Vaughn would be willing to accept to acquire the 60800 units externally

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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Vaughn Music produces 60800 blank CDs on which to record music. The CDs have the following costs Direct Materials $10600 Direct Labour 14800 Variable Overhead 2800 Fixed Overhead 6800 None of Vaughni's foxed overhead costs can be reduced, but another product could be made that would increase the operating income by $4400 if the CDs were acquired externally If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Vaughn would be willing to accept to acquire the 60800 units externally

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