Marigold Corp. incurs the following costs to produce 8500 units of a subcomponent: Direct materials $9000 Direct labor 12750 Variable overhead 12800 Fixed overhead 18000 An outside supplier has offered to sell Marigold the subcomponent for $2.10 a unit. If Marigold could avoid $3000 of fixed overhead by accepting the offer, net income would increase (decrease) by $(6750). $(14500). $19700. $(13700).
Added by Daniela P.
Step 1
- Direct materials: $9,000 - Direct labor: $12,750 - Variable overhead: $12,800 - Fixed overhead: $18,000 - Total cost = Direct materials + Direct labor + Variable overhead + Fixed overhead - Total cost = $9,000 + $12,750 + $12,800 + $18,000 = $52,550 Show more…
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