Saturn Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is: Variable manufacturing cost $12 Fixed manufacturing cost 9 Unit product cost $21 The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs of Saturn can be eliminated. The annual impact on Saturn's net operating income as a result of buying the part from the outside supplier would be: Multiple Choice $2,000 increase. $4,000 increase. $2,000 decrease. $4,000 decrease.
Saturn Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is: Variable manufacturing cost $12 Fixed manufacturing cost 9 Unit product cost $21 The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs of Saturn can be eliminated. The annual impact on Saturn's net operating income as a result of buying the part from the outside supplier would be: Multiple Choice $2,000 increase. $4,000 increase. $2,000 decrease. $4,000 decrease.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter13: The Balanced Scorecard: Strategic-based Control
Section: Chapter Questions
Problem 8E: Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its...
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Saturn Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is:
| Variable manufacturing cost | $12 |
| Fixed manufacturing cost | 9 |
| Unit product cost | $21 |
The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the fixed
Multiple Choice
-
$2,000 increase.
-
$4,000 increase.
-
$2,000 decrease.
-
$4,000 decrease.
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