Phelps Industries is a multi-product company that currently manufactures 30,000 units of part ST35 each month for use in production of its products. The facilities now being used to produce part ST35 have a fixed monthly cost of $150,000 and a capacity to produce 35,000 units per month. If Phelps were to buy part ST35 from an outside supplier, the facilities would be idle, but its fixed costs would continue at 40% of their present amount. The variable production costs of Part ST35 are $11 per unit. If Phelps Industries continues to use 30,000 units of part ST35 each month, it would realize a financial advantage by purchasing this part from an outside supplier only if the supplier's unit price is less than: А. $11.00 В. $14.00 С. $13.00 D. $16.00 Е. None of the above
Phelps Industries is a multi-product company that currently manufactures 30,000 units of part ST35 each month for use in production of its products. The facilities now being used to produce part ST35 have a fixed monthly cost of $150,000 and a capacity to produce 35,000 units per month. If Phelps were to buy part ST35 from an outside supplier, the facilities would be idle, but its fixed costs would continue at 40% of their present amount. The variable production costs of Part ST35 are $11 per unit. If Phelps Industries continues to use 30,000 units of part ST35 each month, it would realize a financial advantage by purchasing this part from an outside supplier only if the supplier's unit price is less than: А. $11.00 В. $14.00 С. $13.00 D. $16.00 Е. None of the above
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...
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