Question 162 pts

Ring Company makes telephones. Currently, Ring makes all components of the
telephones in-house. An outside company has offered to supply one component, part
number X76, for P12 each. Ring uses 22,000 of these components per year. Costs of
X76 are as follows:
 
   Direct materials, P3.00
   Direct labor, P1.50
   Variable overhead, P2.75
   Fixed overhead, P5.00
 
Suppose that 30% of the fixed overhead is avoidable if part X76 is not made by Ring.
Should Ring purchase the part from the outside supplier?

Group of answer choices

No, income will decrease by P10,500.

No, income will decrease by P71,500.
No, income will decrease by P15,000.
Yes, income will increase by P10,500.
Yes, income will increase by P74,500.
Question 172 pts
Harmony is currently producing 100 units of a necessary component part by incurring
P60,000 in direct materials, P12,500 in direct labor, P22,500 in variable overhead, and
P15,000 in fixed overhead. Harmony can purchase the component externally for
P95,000 and only P2,500 of fixed manufacturing costs cannot be avoided (the rest are
avoidable). How much savings will Harmony realize in buying instead of making the
component? 12500
Question 182 pts
LAMIKA Inc. is a multi-product company that currently manufactures 30,000 units of
part JADA each month for use in the production of its main product. The facilities now
being used to produce JADA have fixed monthly cost of P150,000 and a capacity to
produce 84,000 units per month. If LAMIKA were to buy JADA from an outside supplier,
the facilities would be idle, but only 60% of its fixed costs would continue. The variable
production costs of part JADA are P11 per unit. If LAMIKA is able to obtain part JADA
from an outside supplier at a unit purchase price of P12.875, the monthly usage at
which it will be indifferent between purchasing and making part JADA is? 48000

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