Swifty corporation manufactures widgets. bowden company has approached swifty with a proposal to sell the company widgets at a price of $88560 for 1 units. swifty is currently making these components in its own factory. the following costs are associated with this part of the process when 1 units are produced:
direct material $ 33480
direct labor 31320
manufacturing overhead 43200
total $108000
the manufacturing overhead consists of $17280 of costs that will be eliminated if the components are no longer produced by swifty. from swifty’s point of view, how much is the incremental cost or savings if the widgets are bought instead of made?
a)$19440 incremental savings
b)$2160 incremental savings
c)$19440 incremental cost
d)$6480 incremental cost
Answers: 2
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