Vaughn, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $17 Variable overhead 5 Fixed overhead 8 Total $30 Saran Company has contacted Vaughn with an offer to sell it 6900 of the wickets for $24 each. If Vaughn makes the wickets, variable costs are $22 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Vaughn make or buy the wickets? Make; savings = $6900 Make; savings = $13800 Buy; savings = $6900 Buy; savings = $20700
Vaughn, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $17 Variable overhead 5 Fixed overhead 8 Total $30 Saran Company has contacted Vaughn with an offer to sell it 6900 of the wickets for $24 each. If Vaughn makes the wickets, variable costs are $22 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Vaughn make or buy the wickets? Make; savings = $6900 Make; savings = $13800 Buy; savings = $6900 Buy; savings = $20700
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter7: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...
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Vaughn, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows:
| Direct materials and direct labor | $17 |
| Variable |
5 |
| Fixed overhead | 8 |
| Total |
$30
|
Saran Company has contacted Vaughn with an offer to sell it 6900 of the wickets for $24 each. If Vaughn makes the wickets, variable costs are $22 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Vaughn make or buy the wickets?
Make; savings = $6900
Make; savings = $13800
Buy; savings = $6900
Buy; savings = $20700
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