A manufacturer produces hacksaw blades. recently, the manufacturer has decided to enhance its product line and offer band blades. two alternatives are being analyzed: purchase band blades overseas or produce them in-house. if the band blades are made in-house, the manufacturer will not be able to produce hacksaw blades, forgoing a $30,000 profit contribution. revenue from sale of band blades $180,000 outside purchase 170,000 direct material and labor 100,000 variable manufacturing overhead 50,000 avoidable fixed manufacturing overhead 10,000 calculate the incremental cost of making and purchasing band blades, respectively.

The options are given below:

A. $20,000 $40,000

B. 20,000 $10,000

C. $160,000 $170,000

D. $190,000 $170,000

The correct option is D. $190,000 $170,000

Explanation:

The incremental cost of making the band blades is calculated as follows:

=> $30,000 forgone profit contribution

+

$10,000 avoidable fixed manufacturing overhead

+

$100,000 direct material and labor

+

$50,000 variable manufacturing overhead

= $190,000

While The incremental cost of purchasing the band blades is the $170,000 outside purchase cost.

Therefore, we have:

$190,000 $170,000. Option D

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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