The Potato Chip Company has been producing potato chips for 20 years. The product is manufactured...

 

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The Potato Chip Company has been producing potato chips for 20 years. The product is manufactured in batches. The cost of one batch is as follows: Direct materials Direct labour Variable overhead Fixed overhead $2,000 $1,500 $1,000 $2,000 An outside supplier has offered to produce the chips for $4,000 per batch. There will be no changes to the fixed costs per batch if the chips are purchased from the outside supplier. What will be financial impact to the Potato Chip Company if it accepts the offer? Explain why fixed costs will remain even if the product is purchased from an outside supplier. The Potato Chip Company has been producing potato chips for 20 years. The product is manufactured in batches. The cost of one batch is as follows: Direct materials Direct labour Variable overhead Fixed overhead $2,000 $1,500 $1,000 $2,000 An outside supplier has offered to produce the chips for $4,000 per batch. There will be no changes to the fixed costs per batch if the chips are purchased from the outside supplier. What will be financial impact to the Potato Chip Company if it accepts the offer? Explain why fixed costs will remain even if the product is purchased from an outside supplier.

Answer rating: 100% (QA)

ANSWER Make Buy Difference Material cost 2000 0 2000 Labo... View the full answer