题目
题目
单项选择题

Make or buy?  Will & Co. manufactures speed boats. Currently, the company manufactures its own engine for the boats. Cost to make one engine:  Direct materials $25.00 per unit Direct labour $40.00 per unit Variable overhead $15.00 per unit Fixed overhead $20.00 per unit Will & Co. can buy the engine at a cost of $85 each. If Will & Co. outsource the engine they will not save any money on the fixed overhead (these costs will still have to be paid).  Will & Co. currently makes 1000 boats per year so will need to make or buy 1,000 engines. If Will & Co. accepts the offer, what will be the short-term impact on the total net profit?

选项
A.Net profit will decrease by $5,000.
B.Net profit will decrease by $85,000.
C.Net profit will increase by $15,000.
D.Net profit will increase by $20,000.
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思路分析
We need to compare the total cost of making the engines in-house vs buying them, for 1,000 engines. First, calculate the per-unit costs when Will & Co. makes an engine: - Direct materials: 25 - Direct labour: 40 - Variable overhead: 15 - Fixed overhead: 20 Total cost to make per engine = 25 + 40 + 15 + 20 = 100 Thus, total annual cost (if all 1,000 engines are made) = 100 × 1,000 = 100,000. Next, calculate the ......Login to view full explanation

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