Cotton Corp currently makes 10,000 subcomponents a year in one of its factories The unit costs to produce are Per unit Direct materials $ 30 50 Direct labor 11 00 Variable manufacturing overhead 17 50 Fixed manufacturing overhead 24 00 Total unit cost $ 83 00 An outside supplier has offered to provide Cotton Corp with the 10,000 subcomponents at a $82 50 per unit price Fixed overhead is not avoidable If Cotton Corp rejects the outside offer, what will be the effect on short term profits

The Answer is in the image, click to view ...

Question: Cotton Corp. currently makes 10,000 subcomponents a year in one of its factories. The unit costs to produce are: Per unit Direct materials $ 30.50

Cotton Corp. currently makes 10,000 subcomponents a year in one of its factories. The unit costs to produce are:

	Per unit
Direct materials		$	30.50
Direct labor			11.00
Variable manufacturing overhead			17.50
Fixed manufacturing overhead			24.00
Total unit cost		$	83.00

An outside supplier has offered to provide Cotton Corp. with the 10,000 subcomponents at a $82.50 per unit price. Fixed overhead is not avoidable. If Cotton Corp. rejects the outside offer, what will be the effect on short-term profits?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

1) The CFO is considering issuing 150,000 long-term debt bonds consisting of quarterly zero coupon bonds with an initial price of $625 and a three year term. 2) Current long-term debt consists of...

Olive Corp.currently makes 13,500 subcomponents a year in one of its factories. The unit costs to produce are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing...

Olive Corp.currently makes 11,300 subcomponents a year in one of its factories. The unit costs to produce are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing...

olive corp currently makes 20,000 sub components a year in one of its factories. the unit costs produced are: Direct materials: $12, Direct labor: 8, Var. manufacturing overhead: 12, fixed manuf....

Help Cotton Corp.currently makes 10,000 subcomponents a year in one of its factories. The unit costs to produce are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing...

Cotton Corp.currently makes 13,700 subcomponents a year in one of its factories. The unit costs to produce are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing...

4. Wishy-Washy Corp is trying to decide if they want to make a component internally or buy it from an outside source. They will use 300,000 of these components in the upcoming year. The unit costs...

1. Almond has received a special order for 6,000 units of its product at a special price of $90. The product normally sells for $120 and has the following manufacturing costs: Per unit $ Direct...

TB MC Qu. 7-58 (Static) Cotton Corp.currently makes.... 1 points Cotton Corp currently makes 10,000 subcomponents a year in one of its factories. The unit costs to produce are Book Direct materials...

Cotton Corp. currently makes 12,600 subcomponents a year in one of its factories. The unit costs to produce are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing...

Cotton Corp. currently makes 14,800 subcomponents a year in one of its factories. The unit costs to produce are: 45 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing...

Answer True or False: Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the...

In the year just ended a firm had a net income of $m 500, depreciation of $m 300, and capital spending of $m 600. It paid interest of $m 50. Working capital requirements are negligible. The corporate...

7. Fumaric acid is a colourless solid which can be extracted from plants. (a) Describe the reaction of aqueous fumaric acid with aqueous bromine, giving the equation for the reaction and stating any...

The first scenario will be a Verbal Judo scenario in which your scenario follows the standard Verbal Judo interaction: You need to ask somebody to modify their behavior either to do something or to...

Using Language That Works

4. Are my sources relevant?

A How is Tivyas mistake plagiarism? How about Kaavya Viswanathans? How are these cases similar, and how are they different? In either case, does it matter if the plagiarism is intentional or...