Question:

Can somebody please help me with the following accounting problem?

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During 20x6, America, Inc., produced, among other products, 8,100 cameras, incurring the following unit costs: $5 in direct materials, $3 in direct labor, $2 in variable overhead, $4 in fixed overhead, $0.50 in variable selling and administrative expenses, and $1 in fixed selling and administrative expenses. An outsider had offered to produce the cameras for $12 each. Assuming that the factory space would have been idle otherwise, acceptance of the outside offer would have

a. lost the company $8,100.

b. saved the company $32,150.

c. saved the company $17,150.

d. lost the company $12,150.

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  1. d. lost the company $12,150.

    Whether you accept the offer or not, fixed costs must be incurred, so you shd only compare the co's variable costs against the $12 you have to pay the outsider

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