Tapeo Company has always made its electronic components that go into their GPS systems in-house. Streeter...
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Tapeo Company has always made its electronic components that go into their GPS systems in-house. Streeter Company has offered to supply these electronic components at a price of $38 each. Tapeo uses 18,000 units of these components each year. The cost per unit of this component is as follows: $13.75 Direct material. Direct labor Variable overhead Fixed overhead Total Assume that 45% of Tapeo Company's fixed overhead would be eliminated if the electronic component was no longer produced in-house. Required: A. If Tapeo decided to purchase the electronic component from Streeter Company, by how much would its operating income increase or decrease? Increase 16.00 7.00 8.25 $45.00 B. Should Tapeo continue to make the electronic component or buy it from Streeter Company? Tapeo Company has always made its electronic components that go into their GPS systems in-house. Streeter Company has offered to supply these electronic components at a price of $38 each. Tapeo uses 18,000 units of these components each year. The cost per unit of this component is as follows: $13.75 Direct material. Direct labor Variable overhead Fixed overhead Total Assume that 45% of Tapeo Company's fixed overhead would be eliminated if the electronic component was no longer produced in-house. Required: A. If Tapeo decided to purchase the electronic component from Streeter Company, by how much would its operating income increase or decrease? Increase 16.00 7.00 8.25 $45.00 B. Should Tapeo continue to make the electronic component or buy it from Streeter Company?
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Related Book For
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton
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