FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Subject :- Account 

QUESTION 52 Answer the following questions using the information below: Konrade's Engine Co. currently manufactures part TE456. Monthly production costs for 1,000 units are: Direct materials Direct labor Variable overhead costs Fixed overhead costs Total costs $40,000 10,000 30,000 20,000 $100,000 2 It is estimated that 20% of the fixed overhead costs assigned to TE456 will no longer be incurred, if the company purchases TE456 from the outside supplier. Konrade's Engine Company now has the option of purchasing the part from an outside supplier at $89 per unit. If Konrade's Engine Company accepts the offer from the outside supplier, what is the monthly total avoidable costs (i.e. costs that will no longer be incurred)? OA. $80,000 O B. $84,000 O C. $96,000 O D. $100,000
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Transcribed Image Text:QUESTION 52 Answer the following questions using the information below: Konrade's Engine Co. currently manufactures part TE456. Monthly production costs for 1,000 units are: Direct materials Direct labor Variable overhead costs Fixed overhead costs Total costs $40,000 10,000 30,000 20,000 $100,000 2 It is estimated that 20% of the fixed overhead costs assigned to TE456 will no longer be incurred, if the company purchases TE456 from the outside supplier. Konrade's Engine Company now has the option of purchasing the part from an outside supplier at $89 per unit. If Konrade's Engine Company accepts the offer from the outside supplier, what is the monthly total avoidable costs (i.e. costs that will no longer be incurred)? OA. $80,000 O B. $84,000 O C. $96,000 O D. $100,000
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