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Ay 2. Mcq 10. Harcourt Manufacturing (HM) has the capacity to produce 12,400 fax machines par year. HM currently produces and sells 8,200 units per year. HM currently leases its excess capacity for a rental fee of $55,500. The fax machines normally sell for $220 each. Modem Products has offered to buy 3,200 fax machines from HM for $120 each. Unit-level costs associated with manufacturing the fax machines are $39 each for direct labor and $64 each for direct materials. Product-level and facility- level costs are $62,000 and $77,000, respectively. Based on this information (ignore qualitative characteristics) A. HM should reject the offer because accepting it will reduce profitability by $12,400. B. HM should reject the offer because accepting it will reduce profitability by $1,100. C. HM should accept the offer because accepting it will contribute $12,400 to profit. D. HM should accept the offer because accepting it will contribute $55,500 to profit.

Ay 2. Mcq 10. Harcourt Manufacturing (HM) has the capacity to produce 12,400 fax machines par year. HM currently produces and sells 8,200 units per year. HM currently leases its excess capacity for a rental fee of $55,500. The fax machines normally sell for $220 each. Modem Products has offered to buy 3,200 fax machines from HM for $120 each. Unit-level costs associated with manufacturing the fax machines are $39 each for direct labor and $64 each for direct materials. Product-level and facility- level costs are $62,000 and $77,000, respectively. Based on this information (ignore qualitative characteristics) A. HM should reject the offer because accepting it will reduce profitability by $12,400. B. HM should reject the offer because accepting it will reduce profitability by $1,100. C. HM should accept the offer because accepting it will contribute $12,400 to profit. D. HM should accept the offer because accepting it will contribute $55,500 to profit.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...
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Ay 2. Mcq 10. Harcourt Manufacturing (HM) has the capacity to produce 12,400 fax machines par year. HM currently produces and sells 8,200 units per year. HM currently leases its excess capacity for a rental fee of $55,500. The fax machines normally sell for $220 each. Modem Products has offered to buy 3,200 fax machines from HM for $120 each. Unit-level costs associated with manufacturing the fax machines are $39 each for direct labor and $64 each for direct materials. Product-level and facility- level costs are $62,000 and $77,000, respectively. Based on this information (ignore qualitative characteristics) A. HM should reject the offer because accepting it will reduce profitability by $12,400. B. HM should reject the offer because accepting it will reduce profitability by $1,100. C. HM should accept the offer because accepting it will contribute $12,400 to profit. D. HM should accept the offer because accepting it will contribute $55,500 to profit.
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