Chapman Company Manufactures Widgets The Manufacturing Overhead Consists of $24,000 of Costs That Will

question 1

Multiple Choice

Chapman Company manufactures widgets.Embree Company has approached Chapman with a proposal to sell the company widgets at a price of $125,000 for 100,000 units.Chapman is currently making these components in its own factory.The following costs are associated with this part of the process when 100,000 units are produced: $$\begin{array} { l r } \text { Direct materials } & \$ 46,500 \\\text { Direct labor } & 43,500 \\\text { Manufacturing overhead } & 60,000 \\\text { Total } & \$ 150,000\end{array}$$ The manufacturing overhead consists of $24,000 of costs that will be eliminated if the components are no longer produced by Chapman.From Chapman's point of view, how much is the incremental cost or savings if the widgets are bought instead of made?

• A)$25,000 incremental savings
• B)$11,000 incremental cost
• C)$11,000 incremental savings
• D)$25,000 incremental cost

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Definitions:

Crossing Over

The exchange of genetic material between homologous chromosomes during meiosis, leading to genetic diversity.

Homologous Chromosomes

In a diploid organism, chromosomes that come in similar pairs based on their shape, size, and genetic material, with one coming from each parent.

Alleles

Various forms of the same gene, arising by mutation and are found at the same place on a chromosome, responsible for variation in inherited characteristics.

Offspring

The product of reproduction, a new organism produced by one or more parents.