Seasons Manufacturing manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows: Income would increase by $40,000. Income would decrease by $8,000. Income would increase by $8,000. Income would increase by $140,000. Carter, Inc. can make 100 units of a necessary component part with the following costs: Direct Materials $120,000 Direct Labor 20,000 Variable Overhead 60,000 Fixed Overhead 40,000 If Carter can purchase the component externally for $220,000 and only $10,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?
Make and save $30,000 Make and save $10,000 Buy and save $30,000 Buy and save $10,000 company has a process that results in 15,000 pounds of Product A that can be sold for $16 per pound. An alternative would be to process Product A further at a cost of $200,000 and then sell it for $28 per pound. Should management sell Product A now or should Product A be processed further and then sold? What is the effect of the action? Process further, the company will be better off by $180,000. Sell now, the company will be better off by $200,000. Process further, the company will be better off by $20,000. Sell now, the company will be better off by $20,000.
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