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StormLrd StormLrd
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4 years ago
What is the daily operating advantage (disadvantage) of purchasing the water from the independent producer and using the company's Manitoba shipping department, assuming the shipping department is currently shipping 50,000 containers per day for external customers?
A) $0
B) $45,000
C) $225,000
D) $120,000
E) $165,000
Textbook 

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
Read 270 times
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GarretAGarretA
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4 years ago
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More questions for this book are available here
D
Explanation:  D) Current cost         $ 900,000

Internal transfer variable cost (30,000 × $2.50)   $  75,000
Purchase cost (30,000 × $20)         600,000
Opportunity cost (30,000 × ($6.00 - $2.50   )   105,000
    Total                  $780,000

Savings = $900,000 - $780,000 = $120,000
Without mathematics, there's nothing you can do. Everything around you is mathematics. Everything around you is numbers.

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