question flub company manufactures 10 000 units of widgets for use in its annual pro 4284761
Question
Flub Company manufactures 10,000 units of widgets for use in its annual production. Costs are direct materials $20,000, direct labor $55,000, variable overhead $45,000, and fixed overhead $70,000. Flotsam Company has offered to sell Flub 10,000 units of widgets for $18 per unit. If Flub accepts the offer, some of the facilities presently used to manufacture widgets could be rented to a third party at an annual rental of $15,000. Additionally, $4 per unit of the fixed overhead applied to widgets would be totally eliminated.
Requirements: Prepare an incremental analysis schedule to demonstrate if Flub should accept Flotsam's offer.
Flub Inc.
Incremental Analysis
To Produce or Buy
Produce
Buy
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Flub Inc. |
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Incremental Analysis |
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To Produce or Buy |
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