Speed Quest Inc Another Manufacturer Has Offered to Supply Speed Quest with the for the Boats

question 69

Multiple Choice

Speed Quest Inc.manufactures speed boats.Currently,the company manufactures its own engine for the boats at the following unit costs:
$\begin{array}{lr} \text { Direct materials } &\$25.00\\ \text {Direct labour } &\$40.00\\ \text { Variable overhead } &\$15.00\\ \text { Fixed overhead } &\$20.00\\\end{array}$

Another manufacturer has offered to supply Speed Quest with the engine at a cost of $85 each.Speed Quest currently makes 1000 boats annually.If Speed Quest accepts the offer,what will be the short-term impact on net income?

• A) Decrease of $5000
• B) Increase of $15 000
• C) Decrease of $85 000
• D) Increase of $20 000

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Definitions:

Organizational Requirements

The needs or conditions that an organization must meet to achieve its objectives effectively.

HR Forecasting

The process of predicting future human resources needs of an organization based on current data, trends, and projected changes in the business environment.

Workforce Knowledge

The collective skills, expertise, and understanding possessed by an organization’s employees.

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The set of abilities, knowledges, and skills that enable an employee to perform job tasks successfully.