Question 12 Vaughn Manufacturing manufactures widgets. Embree Company has approached Vaughn with a proposal to...
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Question 12 Vaughn Manufacturing manufactures widgets. Embree Company has approached Vaughn with a proposal to sell the company widgets at a price of $125000 for 100000 units. Vaughn is currently making these components in its own factory. The following costs are associated with this part of the process when 100000 units are produced: Direct materials $ 46500 Direct labor 43500 Manufacturing overhead 60000 Total $150,000 The manufacturing overhead consists of $31000 of costs that will be eliminated if the components are no longer produced by Vaughn. From Vaughn's point of view, how much is the incremental cost or savings if the widgets are bought instead of made? $4000 incremental cost $4000 incremental savings $25000 incremental cost $25000 incremental savings
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