The Alliance For Global Education Operations And Supply Chain Management Assignment Help - The required volume

Question - Altertech Inc. manufactures a product which contains a circuit board. The company has always
purchased this circuit board from a supplier for $32 each. Altertech recently upgraded its own
manufacturing capabilities and now has enough excess capacity (including trained workers) to begin
manufacturing the circuit board instead of buying it. The company prepared the following per unit cost
projections of making the circuit board, assuming that overhead is allocated to the part at the normal
predetermined overhead rate of 110% of direct labor cost.

Direct materials $2
direct labor 20
Overhead (fixed and variable) 22
Total $44

The required volume of output to produce the circuit boards will not require any incremental fixed
overhe ...Read More ad. Incremental variable overhead cost is $3 per circuit board. What is the effect on income if
Altertech decides to make the circuit boards?
Income will decrease by $7 per unit.
Income will increase by $7 per unit.
Income will increase by $12 per unit.
Income will decrease by $12 per unit.
Income will increase by $10 per unit. ...Read Less

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