The following data pertains to the Montrose Company's three products:

\begin{array}{lrrr}&M&N&O\\\text { Unit sales per month } & \underline{9,000} & \underline{14,000} & \underline{8,000} \\\\\text { Selling price per unit } & \$ 6.00 & \$ 11.25 & \$ 7.50 \\\text { Variable costs per unit } & 3.00 & 9.00 & 7 . 0 0\\\text { Unit contribution margin } & \$ 3.00 & \$ 2.25 & \$ 0.50 \\\text { Batches } & 5 & 10 & 5 \\\text { Setups } & 6 & 3 & 1\\\text { Difect fixed costs }\\\text { Advertising } & \$ 3,000 & \$ 2,000 & \$ 1,000 \\\text { Supervision } & 5,000 & 5,000 & 5,000\\\end{array}

Common fixed costs
Inspecting products

(\$ 10,000)

Materials handling

(\$ 4,000)

Customer service

(\$ 5,000)

Plant depreciation

(\$ 6,000)

General administration

(\$ 8,000)

When Montrose converted over to ABC it discovered the following: $The following data pertains to the Montrose Company's three products: \begin{array}{lrrr}&M&N&O\\ \text { Unit sales per month } & \underline{9,000} & \underline{14,000} & \underline{8,000} \\\\ \text { Selling price per unit } & \$ 6.00 & \$ 11.25 & \$ 7.50 \\ \text { Variable costs per unit } & 3.00 & 9.00 & 7 . 0 0\\ \text { Unit contribution margin } & \$ 3.00 & \$ 2.25 & \$ 0.50 \\ \text { Batches } & 5 & 10 & 5 \\ \text { Setups } & 6 & 3 & 1\\\text { Difect fixed costs }\\ \text { Advertising } & \$ 3,000 & \$ 2,000 & \$ 1,000 \\ \text { Supervision } & 5,000 & 5,000 & 5,000\\ \end{array} Common fixed costs Inspecting products (\$ 10,000) Materials handling (\$ 4,000) Customer service (\$ 5,000) Plant depreciation (\$ 6,000) General administration (\$ 8,000) When Montrose converted over to ABC it discovered the following: The operating income for Montrose would be A)$8,500. B)$9,000. C)$19,000. D)$27,000.$ The operating income for Montrose would be
A)$8,500.
B)$9,000.
C)$19,000.
D)$27,000.

Which of the Following Costs Is Relevant to a Make-Or-Buy

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge