Use the following to answer questions:
Richardson Motors uses ten units of part Number T305 each month in the production of large Diesel engines. The cost to manufacture one unit of T305 is presented below:

Material handling, which is not included in manufacturing overhead, represents the direct variable costs of the receiving department that are applied to direct materials and purchased components on the basis of their costs. Richardson's annual manufacturing overhead budget is one-third variable and two-thirds fixed) Simpson Castings, one of Richardson's reliable vendors, has offered to supply T305 at a unit price of $30,000.
-If Richardson Motors purchases the ten T305 units from Simpson Castings, the capacity Richardson used to manufacture these parts would be idle. Should Richardson decide to purchase the parts from Simpson, the out-of-pocket cost per unit of T305 would:
A) Increase $3,600
B) Increase $9,600
C) Decrease $4,400
D) Decrease $12,400

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Use the following to answer questions:
Richardson Motors uses ten units of part Number T305 each month in the production of large Diesel engines. The cost to manufacture one unit of T305 is presented below:
  
Material handling, which is not included in manufacturing overhead, represents the direct variable costs of the receiving department that are applied to direct materials and purchased components on the basis of their costs. Richardson's annual manufacturing overhead budget is one-third variable and two-thirds fixed) Simpson Castings, one of Richardson's reliable vendors, has offered to supply T305 at a unit price of $30,000.
-If Richardson Motors purchases the ten T305 units from Simpson Castings, the capacity Richardson used to manufacture these parts would be idle. Should Richardson decide to purchase the parts from Simpson, the out-of-pocket cost per unit of T305 would:
A) Increase $3,600 
B) Increase $9,600 
C) Decrease $4,400 
D) Decrease $12,400

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The Answer of Use the following to answer questions:
Richardson Motors uses ten units of part Number T305 each month in the production of large Diesel engines. The cost to manufacture one unit of T305 is presented below:
  
Material handling, which is not included in manufacturing overhead, represents the direct variable costs of the receiving department that are applied to direct materials and purchased components on the basis of their costs. Richardson's annual manufacturing overhead budget is one-third variable and two-thirds fixed) Simpson Castings, one of Richardson's reliable vendors, has offered to supply T305 at a unit price of $30,000.
-If Richardson Motors purchases the ten T305 units from Simpson Castings, the capacity Richardson used to manufacture these parts would be idle. Should Richardson decide to purchase the parts from Simpson, the out-of-pocket cost per unit of T305 would:
A) Increase $3,600 
B) Increase $9,600 
C) Decrease $4,400 
D) Decrease $12,400

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