Homework Help is Here – Start Your Trial Now!
Business
Accounting
Biz Tech Inc. is currently purchasing a standard part for $52 per unit which is used for manufacturing different types of appliances. The company is operating at 70% capacity and can make the part at a cost of $65 per unit which include an allocated fixed cost per unit of $11. If the company decide to use the idle manufacturing space to produce 30,000 units of parts, what would be the amount of increase or decrease in differential costs from making the part rather than purchasing?  Group of answer choices Cost would be decreased or saved by $60,000 Cost would be increased by $150,000 Cost would be decreased by $150,000 Cost would be increased by $60,000

Biz Tech Inc. is currently purchasing a standard part for $52 per unit which is used for manufacturing different types of appliances. The company is operating at 70% capacity and can make the part at a cost of $65 per unit which include an allocated fixed cost per unit of $11. If the company decide to use the idle manufacturing space to produce 30,000 units of parts, what would be the amount of increase or decrease in differential costs from making the part rather than purchasing?  Group of answer choices Cost would be decreased or saved by $60,000 Cost would be increased by $150,000 Cost would be decreased by $150,000 Cost would be increased by $60,000

Managerial Accounting
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...
See similar textbooks
icon
Related questions
Question

Biz Tech Inc. is currently purchasing a standard part for $52 per unit which is used for manufacturing different types of appliances. The company is operating at 70% capacity and can make the part at a cost of $65 per unit which include an allocated fixed cost per unit of $11.

If the company decide to use the idle manufacturing space to produce 30,000 units of parts, what would be the amount of increase or decrease in differential costs from making the part rather than purchasing? 

Group of answer choices
Cost would be decreased or saved by $60,000
Cost would be increased by $150,000
Cost would be decreased by $150,000
Cost would be increased by $60,000
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS