Use the following to answer questions:
McCoy Industries (MI) produces ice cream supplies including bowls, scoops and shake makers. MI is considering outsourcing their shake makers. Juan Hernandez, the controller complied the following

information.
Mr. Hernandez assumes 100,000 shake makers will be sold. If the shake maker is outsourced, product level costs will increase by $35,000 to cover the increased cost of maintaining the relationship with the supplier. Other product level and facility level costs will not change.
-Given the facts above, assume that MI can use the space now devoted to shake makers as storage. Because they will no longer need to rent a warehouse, they can save $120,000 in rental. What is the most MI should pay for the shake makers from an independent supplier?
A) $5.40
B) $5.75
C) $7.50
D) $10.00

Question

Use the following to answer questions:
McCoy Industries (MI) produces ice cream supplies including bowls, scoops and shake makers. MI is considering outsourcing their shake makers. Juan Hernandez, the controller complied the following
  
information.
Mr. Hernandez assumes 100,000 shake makers will be sold. If the shake maker is outsourced, product level costs will increase by $35,000 to cover the increased cost of maintaining the relationship with the supplier. Other product level and facility level costs will not change.
-Given the facts above, assume that MI can use the space now devoted to shake makers as storage. Because they will no longer need to rent a warehouse, they can save $120,000 in rental. What is the most MI should pay for the shake makers from an independent supplier?
A) $5.40 
B) $5.75 
C) $7.50 
D) $10.00

Quizplus · Accepted Answer

The Answer of Use the following to answer questions:
McCoy Industries (MI) produces ice cream supplies including bowls, scoops and shake makers. MI is considering outsourcing their shake makers. Juan Hernandez, the controller complied the following
  
information.
Mr. Hernandez assumes 100,000 shake makers will be sold. If the shake maker is outsourced, product level costs will increase by $35,000 to cover the increased cost of maintaining the relationship with the supplier. Other product level and facility level costs will not change.
-Given the facts above, assume that MI can use the space now devoted to shake makers as storage. Because they will no longer need to rent a warehouse, they can save $120,000 in rental. What is the most MI should pay for the shake makers from an independent supplier?
A) $5.40 
B) $5.75 
C) $7.50 
D) $10.00

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