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Category > Management Posted 19 Dec 2017 My Price 10.00

cost to produce a bulb

The You Light up My Life Company manufactures various types of household light fixtures. The company has produced its own light bulbs. The cost to produce a bulb are as follows:

 

Direct materials

$0.10

Direct labour

$0.05

Variable manufacturing overhead

$0.01

Fixed manufacturing overhead

$0.03

Total

$0.19

 

 

Connor Electric has offered to supply all light bulbs for $0.18 a bulb. Anticipated volume required for the coming year will be 2,000,000 bulbs. The fixed manufacturing overhead includes the part-time production supervisor who makes $15,000 per year and will no longer be necessary if the bulbs are purchased elsewhere.

What is the total annual advantage or disadvantage of outsourcing rather than making the bulb?

 

 

Select one:

a. $35,000 advantage

b. $25,000 disadvantage

c. $20,000 advantage

d. $25,000 advantage

Answers

CourseLover
(12)
Status NEW Posted 19 Dec 2017 06:12 AM My Price 10.00

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