Speed Quest Inc.manufactures speed boats.Currently,the company manufactures its own engine for the boats at the following unit costs:
$\begin{array}{lr}
\text { Direct materials } &\$25.00\
\text {Direct labour } &\$40.00\
\text { Variable overhead } &\$15.00\
\text { Fixed overhead } &\$20.00\
\end{array}$

Another manufacturer has offered to supply Speed Quest with the engine at a cost of $85 each.Speed Quest currently makes 1000 boats annually.If Speed Quest accepts the offer,what will be the short-term impact on net income?

Question

Speed Quest Inc.manufactures speed boats.Currently,the company manufactures its own engine for the boats at the following unit costs:
$\begin{array}{lr}
  \text { Direct materials } &\$25.00\
 \text {Direct labour  } &\$40.00\
 \text { Variable overhead } &\$15.00\
 \text { Fixed overhead } &\$20.00\
\end{array}$

Another manufacturer has offered to supply Speed Quest with the engine at a cost of $85 each.Speed Quest currently makes 1000 boats annually.If Speed Quest accepts the offer,what will be the short-term impact on net income?

Quizplus · Accepted Answer

The Answer is A

Speed Quest Inc Another Manufacturer Has Offered to Supply Speed Quest with the for the Boats