Wishnell Toys Can Make 5,000 Toy Robots with the Following

question 27

Multiple Choice

Wishnell Toys can make 5,000 toy robots with the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 74,000 \\\text { Direct Labour } & 30,000 \\\text { Variable Overhead } & 23,000 \\\text { Fixed Overhead } & 15,000\end{array}$$ The company can purchase the 5,000 robots externally for $145,000.The avoidable fixed costs are $15,000 if the units are purchased externally.What is the cost savings if the company makes the robots?

• A)$18,000
• B)$15,000
• C)$5,000
• D)$3,000

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Definitions:

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