Question

Gordon Corporation produced 10,000 digital watches in the current year. Variable costs are $8 per watch. Overhead assigned is $2.25 per watch. A supplier offers the watches for $9.50 each. Gordon's production manager reports the incremental overhead is $1.25 per watch.
Gordon should:
A. Continue making watches as an additional $1.50 per watch would be incurred if bought from the supplier.
B. Continue making watches as an additional $0.25 per watch would be incurred if bought from the supplier.
C. Buy the watches as they would save $0.75 per watch.
D. Buy the watches as they would save $1.50 per watch.
E. Buy the watches as they would save $1.75 per watch.

Answer 1

Answer:b

Explanation:sorry if the answer is wrong