Max Company uses 20000 units of Part A in producing its products A supplier

Max company uses 20000 units of part a in producing

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89.Max Company uses 20,000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier isa.$0.b.$20,000.c.$140,000.d.$160,000.Ans: B, LO: 4, Bloom: AN, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics90.Truckel, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows:Direct materials and direct labor$11Variable overhead5Fixed overhead8Total$24The fixed overhead is an allocated common cost. How much is the relevant cost of the wicket?21 - 20
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91.Truckel, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows:Direct materials and direct labor$11Variable overhead5Fixed overhead8Total$24Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $18 each. If Truckel makes the wickets, variable costs are $16 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Truckel make or buy the wickets?92.Galley Industries can produce 100 units of a necessary component part with the following costs:Direct Materials$20,000Direct Labor9,000Variable Overhead21,000Fixed Overhead8,000If Galley Industries purchases the component externally, $2,000 of the fixed costs can be avoided. Below what external price for the 100 units would Galley choose to buy instead of make?93.Which decision will involve no incremental revenues?a.Make or buy decisionb.Drop a product linec.Accept a special orderd.Additional processing decisionAns: A, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Business Economics
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