Direct materials $3 Direct labor 4 Variable overhead 5 Fixed overhead 8

Direct materials
$3
Direct labor
4
Variable overhead
5
Fixed overhead
8
Plymouth Inc. has offered to sell Henderson 6000 motors for $15 per unit. If Henderson accepts the offer 60% of the fixed overhead currently allocated to the
motors could be avoided.
What are the relevant costs per unit of Henderson manufacturing the motors themselves?
Answer
a. $16.80
b. $15.20
c. $20.00
d. $12.00
2 points
Question 58 Refer to the Henderson Manufacturing Inc. information above. If Henderson accepts the offer to purchase 6000 motors from Plymouth net income will:
a. decrease by $1200.
b. increase by $30000.
c. decrease by $18000.
d. increase by $10800.
Answer
a. decrease by $1200
b. increase by $30000
c. decrease by $18000
d. increase by $10800