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Question
Seven Seas Company manufactures 100 luxury yachts per month. Included in each yacht is a compact media center. Seven Seas manufactures the media center in-house, but is considering the possibility of outsourcing that function, in order to close down some of their facilities and reduce the administrative costs. At present, the variable cost per unit is $275 and the fixed costs are $39,000 per month. Assume that if they outsource, fixed costs could be reduced by 40%. The production manager advised the company to contract with a foreign supplier which offered a contract rate of $420 per unit. If they outsource, how would that affect operational income?
A) Operational income would improve by $1,100.
B) Operational income would improve by $4,000.
C) Operational income would decline by $14,500.
D) Operational income would remain the same.
Answer
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Related questions
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Aug
Sep Cash collections
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18,000 Operating expenses
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0
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B) classified form balance sheet.
C) account form balance sheet.
D) audited form balance sheet.
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The accounting process of copying a transaction from the journal to the ledger is called:
A) journalizing.
B) posting.
C) proofing.
D) footing.
Q:
A) chart of accounts.
B) ledger.
C) trial balance.
D) journal.
Answer: B
Q:
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B) Revenues decrease owner's equity, so a revenue account's normal balance is a debit balance.
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Q:
The balance of an account is the:
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B) account number, as shown in the chart of accounts.
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Q:
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B) finding the account number in the chart of accounts.
C) recording the transaction, including a brief explanation.
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Q:
In the accounting system, the first place that transactions are recorded is the ledger.
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At the end of the year, actual data were as follows:
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B) $6,300 Unfavorable
C) $12,000 Favorable
D) $12,000 Unfavorable