Henderson Manufacturing Inc.
Henderson Manufacturing Inc. manufactures electric scooters. The company currently makes all of the electronic components for the scooter itself. When 6000 motors are manufactured each year, the motor costs per unit are as follows:
$\begin{array}{lr}
\text { Direct materials } &\$3\
\text {Direct labour } &4\
\text { Variable overhead } &5\
\text { Fixed overhead } &8\
\end{array}$

Plymouth Inc. has offered to sell Henderson 6000 motors for $15 per unit. If Henderson accepts the offer, 60% of the fixed overhead currently allocated to the motors could be avoided.
-If Henderson accepts the offer to purchase 6000 motors from Plymouth,net income will:

Question

Henderson Manufacturing Inc.
Henderson Manufacturing Inc. manufactures electric scooters. The company currently makes all of the electronic components for the scooter itself. When 6000 motors are manufactured each year, the motor costs per unit are as follows:
$\begin{array}{lr}
  \text { Direct materials } &\$3\
 \text {Direct labour  } &4\
 \text { Variable overhead } &5\
 \text { Fixed overhead } &8\
\end{array}$

Plymouth Inc. has offered to sell Henderson 6000 motors for $15 per unit. If Henderson accepts the offer, 60% of the fixed overhead currently allocated to the motors could be avoided.
-If Henderson accepts the offer to purchase 6000 motors from Plymouth,net income will:

Quizplus · Accepted Answer

If Henderson accepts the offer, net income will increase by $1.80 per motor ($54,000 ÷ 30,000 motors) which means that accepting the offer to purchase 6000 motors will increase net income by $10,800 ($1.80 × 6000 motors).

Henderson Manufacturing Inc Plymouth Inc