U-RIDE, Incorporated currently produces the electric engines that are used in golf carts made and sold by the Company. Electco has offered to sell the electric engines to U-RIDE at a price of $291 each.Current production information follows:Unit-level material and labor$240Facility-level depreciation of manufacturing equipmentProduct-level engine production supervisor's salary$6,300 /month$3,300 /month$21,500Annual facility-level utilitiesU-RIDE is currently operating profitably producing and selling 3,300 engines a year using 80% of its manufacturing capacity. Which of the following is true?Multiple ChoiceOOU-RIDE should make the engines for cost savings of $51 per unit.Buying the units would increase U-RIDE's cost by $39 per unit.U-RIDE has avoidable costs of greater than $291 per unit and should therefore buy the engines.Buying the units would increase profitability by $90 per unit.

Facility-level depreciation and Annual facility-level utilities would not be considered for…

Answered: J-RIDE is currently operating…

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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Pharoah International Corporation has two divisions, beta and gamma. Beta produces an electronic component that sells for $75 per unit, with the following costs based on its capacity of 213,000 units: Direct materials $22 Direct labour 17 Variable overhead 4 Fixed overhead 12 Beta is operating at 74% of normal capacity and gamma is purchasing 14,500 units of the same component from an outside supplier for $69 per unit. (a) Calculate the benefit, if any, to beta in selling to gamma 14,500 units at the outside supplier's price. Benefit $ per unit
Foc Give me correct answer with explanation.
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J-RIDE is currently operating profitably producing and selling 3,300 engines a year using 80% of its manufacturing capacity. Which of the following is true?