Multiple Choice QuestionA company currently makes a component used in production. The per unit costs incurred to make the component include: Direct materials: $5; Direct labor: $2; Overhead: $4; Total cost: $11. Twenty-five percent of the overhead costs are considered incremental. The company can purchase the component from another source for $10. The company should do which of the following?Multiple choice question.The company can be indifferent because incremental costs are $10 and the purchase price is $10.The company should buy the components to save $2 per unit.The company should make the components because incremental costs are $2 less than the purchase price.The company should buy the components to save $1 per unit.

Our company can produce a product that incurs the following costs per unit: direct materials, $10; direct labor, $24, and overhead, $16. An outside supplier has offered to sell the product to us for $45. If the company buys from the supplier, it will still incur 45% of its overhead cost. Compute the net incremental cost or savings of buying.Group of answer choices$4.00 savings per unit.$4.00 cost per unit.$2.20 cost per unit.$3.80 cost per unit.$2.20 savings per unit.

Multiple Choice QuestionA manufacturing company currently produces 1,000 units of a product at a cost of $5,000. The units sell for $7,000. Alternatively, the company can process the units further to produce a refined product that will sell for $10,000. The additional processing will cost $4,000. The company should:Multiple choice question.process further because net incremental income will be $1,000process further because net incremental income will be $6,000sell as is because the incremental income of selling as is versus processing further will increase income by $1,000sell as is because processing further will reduce income by $6,000

Multiple Choice QuestionCommonwealth Company has the following unit costs: direct materials $2, direct labor $4, variable overhead $1, fixed overhead $3. Under the absorption costing method, what is the total unit cost?Multiple choice question.$5$6$10$7

Multiple Choice QuestionA company purchased manufacturing equipment 5 years ago for $50,000. Book value is currently $5,000 and the remaining useful life is 3 years. The equipment incurs variable manufacturing costs of $30,000. The company is considering replacing the equipment. The new equipment will cost $75,000, have a useful life of 3 years, and is more efficient and, therefore, only costs $10,000 in variable manufacturing costs to operate each year. The vendor is willing to accept the old equipment with a selling price of $20,000. The company should:Multiple choice question.keep the old equipment because the total net increase in income will be $5,000replace the old equipment because the total net increase in income will be $5,000replace the old equipment because the total net decrease in income will be $5,000keep the old equipment because replacing it will decrease income by $5,000 if they purchase the new equipment

A company works on three jobs and incurs the following: Direct materials - $50,000 and Direct labor - $100,000. The company uses a predetermined overhead rate of 60% of direct labor costs. How much overhead will be allocated to the three jobs?Multiple choice question.$60,000$50,000$15,000$75,000