Cerise Corporation manufacturers a part for its production cycle. The costs per unit for 5,000 units of this part are as follows: $$\begin{array} { l r }
\text { Direct materials } & \$ 16 \
\text { Direct labor } & 20 \
\text { Variable overhead } & 8 \
\text { Fixed overhead } & 16 \
\text { Total } & \$ 60
\end{array}$$ Jade Company has offered to sell Cerise Corporation 5,000 units of the part for $56 per unit. If Cerise Corporation accepts Jade Company's offer, total fixed costs will be reduced to $30,000. Which of the following is correct decision and correct increase in profit?
A)Buy, $50,000
B)Buy, $20,000
C)Make, $10,000
D)Buy, $10,000

Question

Cerise Corporation manufacturers a part for its production cycle. The costs per unit for 5,000 units of this part are as follows: $$\begin{array} { l r } 
\text { Direct materials } & \$ 16 \
\text { Direct labor } & 20 \
\text { Variable overhead } & 8 \
\text { Fixed overhead } & 16 \
\text { Total } & \$ 60
\end{array}$$ Jade Company has offered to sell Cerise Corporation 5,000 units of the part for $56 per unit. If Cerise Corporation accepts Jade Company's offer, total fixed costs will be reduced to $30,000. Which of the following is correct decision and correct increase in profit?
A)Buy, $50,000
B)Buy, $20,000
C)Make, $10,000
D)Buy, $10,000

Quizplus · Accepted Answer

The Answer of Cerise Corporation manufacturers a part for its production cycle. The costs per unit for 5,000 units of this part are as follows: $$\begin{array} { l r } 
\text { Direct materials } & \$ 16 \
\text { Direct labor } & 20 \
\text { Variable overhead } & 8 \
\text { Fixed overhead } & 16 \
\text { Total } & \$ 60
\end{array}$$ Jade Company has offered to sell Cerise Corporation 5,000 units of the part for $56 per unit. If Cerise Corporation accepts Jade Company's offer, total fixed costs will be reduced to $30,000. Which of the following is correct decision and correct increase in profit?
A)Buy, $50,000
B)Buy, $20,000
C)Make, $10,000
D)Buy, $10,000

Cerise Corporation Manufacturers a Part for Its Production Cycle Jade Company Has Offered to Sell Cerise Corporation 5,000 Units