Reference no: EM132530041

Question 1: Wheeler Company can produce a product that incurs the following costs per unit: direct materials, $10; direct labor, $24, and overhead, $16. An outside supplier has offered to sell the product to Wheeler for $45. If Wheeler buys from the supplier, it will still incur 45% of its overhead cost. Compute the net incremental cost or savings of buying.

Multiple Choice

Option 1: $4.00 savings per unit.

Option 2: $4.00 cost per unit.

Option 3: $2.20 cost per unit.

Option 4: $3.80 cost per unit.

Option 5: $2.20 savings per unit.