The SP Corporation makes 40,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is:
Direct materials $ 9.90
Direct labor $ 8.90
Variable manufacturing overhead $ 3.65
Fixed manufacturing overhead $ 4.60
An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to SP Corporation for this motor is $25.15. If SP Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. The annual financial advantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be:
Multiple Choice
($76,000)
$254,000
108,000
$184,000
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The SP Corporation makes 40,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
You have a very simple business with just four T-accounts. One has a credit balance of $34,888. The other three have debit balances of $23,322, $4,312, and $5,675. Are your accounts in balance? a) Yes b) No
Answers (1)
Nick Bosch has prepared the following list of statements about bonds. Identify each statement as true or false. 1. Bonds are a form of interest-bearing notes payable. 2.
Answers (2)
Select all that apply. _ is a characteristic of physical work environment. Temperature Weather Shift work Equipment
Answers (1)
The town of Gracie has established a permanent fund to account for numerous significant gifts intended to maintain a cemetery in perpetuity. Investment earnings from the permanent fund have been more than enough to maintain the cemetery.
Answers (1)
Last year the price of corn was $3 a bushel and the quantity of corn demanded was 10 million bushels. this year the price of corn was $4.00 a bushel and the quantity demanded was 9 million bushels.
Answers (1)
New Questions in Business
A woman who sells cigarettes in a state that has legalized recreational marijuana use disagrees with legalizing marijuana. She knows that the federal government still considers marijuana illegal. Which action might the woman take?
Answers (1)
At a cocktail party, you can expect the average person to eat how many hors d'oeurves in two and a half hours? A. 8 B. 15 C. 20 D. 10
Answers (1)
A person might accidentally overdraw because they forget to record a deposit. a. True b. False
Answers (1)
It costs Sheffield Corp. $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 4500 scales at $15 each.
Answers (1)
Factory Overhead Costs During May, Bergan Company incurred factory overhead costs as follows: indirect materials, $8,800; indirect labor, $6,600; utilities cost, $4,800; and factory depreciation, $9,000.
Answers (1)