Business
Business, 28.05.2021 17:00, jeffyisdrunk

The Southern Bell Company manufactures 2,000 telephones per year. The full manufacturing costs per telephone are as follows: Direct materials $2
Direct labor $8
Variable manufacturing overhead $6
Average fixed manufacturing overhead $6
The Illinois Bell Company has offered to sell Southern Bell Company 2,000 telephones for $15 per unit. If Southern Bell Company accepts the offer, $10,000 of fixed overhead will be eliminated. Southern Bell should:.
A. Make the telephones; the savings is $2,000.
B. Buy the telephones; the savings is $24,000.
C. Make the telephones; the savings is $12,000.
D. Buy the telephones; the savings is $12,000.

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Answers: 3

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