Quiet Company currently makes 1,000 units of component PDQ, which it uses to make some of its
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Question:
Quiet Company currently makes 1,000 units of component PDQ, which it uses to make some of its products. Quiet has the following information about its per-unit production costs for PDQ:
Direct materials $15
Direct labor $10
Variable overhead $5
Fixed overhead $30
Total unit cost $60
Of the fixed overhead, 1/3 is an allocation of facility costs
Loud Company has offered to sell component
PDQ to Green for $48 per unit.
If Quiet Company decides to stop making component PDQ and purchase it from Loud Company, what will be the change in Quiet Company's cash flow?
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
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