The National Division of Roboto Company is buying 10,000 widgets from an outside supplier at $30 per unit. Roboto's Overseas Div
ision, which is producing and selling at full capacity (12,000 units), has the following sales and cost structure:
Sales price per unit $45.00
Variable cost per unit 22.50
Fixed cost (at capacity) per unit 15.00
If the Overseas Division meets the outside supplier's price and sells the 10,000 widgets to National, the effect on overall company profits will be:
A. $75,000 higher
B. $225.000 lower
C. $300,000 higher
D. $150,000 lower
Sales price per unit $45.00
Variable cost per unit 22.50
Fixed cost (at capacity) per unit 15.00
If the Overseas Division meets the outside supplier's price and sells the 10,000 widgets to National, the effect on overall company profits will be:
A. $75,000 higher
B. $225.000 lower
C. $300,000 higher
D. $150,000 lower
1 answer:
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Answer:
$9.2 0
Explanation:
The calculation of the Finishing Department is shown below:-
Plant - wide overhead rate = Total overhead ÷ Total machine hour
= ($470,000 + $737,900) ÷ ($470,000 + 133,950)
Plant wide overhead rate = $2 per machine hour
Machine hour for product = 4.2 + 0.4
= $4.6 machine hour
Applied overhead = Machine hour for product × Plant wide overhead rate
= $4.6 × $2
= $9.2 0
