Question: How we got 10000? You make component X in-house at a unit cost of $80/unit, which consists of direct materials $60/unit, direct labor $5/unit, variable
How we got 10000? You make component X in-house at a unit cost of $80/unit, which consists of direct materials $60/unit, direct labor $5/unit, variable overhead $5/unit, and fixed overhead $10/unit. An outside supplier offered to manufacture component X for you at a wholesale price of $60 per unit. You need 1, 000 units of X per month. If you outsource the production of X, how much will your profit change in the short term? A. decrease by $20, 000 per month (relative to producing X in-house) B. decrease by $10, 000 per month C. decrease by $5, 000 per month D. increase by $10, 000 per month E. increase by $20, 000 per month
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
