Litto Fray's produces corn chips.The cost of one batch is below: $$\begin{array} { l r }
\text { Direct materials } & \$ 18.00 \
\text { Direct labour } & 13.00 \
\text { Variable overhead } & 12.00 \
\text { Fixed overhead } & 14.00
\end{array}$$ An outside supplier has offered to produce the corn chips for $26 per batch.How much will Litto Fray save if it accepts the offer?
A)$2.00 per batch
B)$17.00 per batch
C)$31.00 per batch
D)$6.00 per batch

Question

Litto Fray's produces corn chips.The cost of one batch is below: $$\begin{array} { l r } 
\text { Direct materials } & \$ 18.00 \
\text { Direct labour } & 13.00 \
\text { Variable overhead } & 12.00 \
\text { Fixed overhead } & 14.00
\end{array}$$ An outside supplier has offered to produce the corn chips for $26 per batch.How much will Litto Fray save if it accepts the offer?
A)$2.00 per batch
B)$17.00 per batch
C)$31.00 per batch
D)$6.00 per batch

Quizplus · Accepted Answer

The total cost of one batch is $18 + $13 + $12 + $14 = $57. If Litto Fray accepts the offer, it will save $57 - $26 = $31 per batch.

Litto Fray's Produces Corn Chips An Outside Supplier Has Offered to Produce the Corn Chips