QUESTION 9 eff deaided to eliminate an UNPROFITABLE segment

QUESTION 9 eff deaided to eliminate an UNPROFITABLE segment from his business. He knows for sure that O it is impossible for net inoome to decrease. expenses allocated to the eliminated segment will be eliminated. fooed O variable expenses of the eliminated segment will be eliminated. OMís impossible for net income to increase. QUESTION 10 that is a part of a machine it also manufacturers. An outside supplier has offered to make 12,000 switches at $7 per switch. Felix\' cost will not incur any variable costs if the switches are bought, but will continue the switch or accept the outside supplier\'s offer. Be sure your analysis and that analysts to incur the fixed cost. Show an analysis that recommends whether Felix should continue making t on are clearty Path: p Words:0 Click Save and Submit to save and submit. Click Save All Answers to sque all answers. Save A

Solution

Answer 9)

Variable expenses of the eliminated segment will be eliminated

Because variable cost are associated with each unit produced and are incurred only when they are produced, so if no unit are produced from that segment their will be no variable cost for them.

Answer 10)

If he buys from outside he will have to pay $10( $7 + fixed cost i.e. $3) for each switch

And if he produces that switch he will incure $9 for each switch

So, he should definitely produce the switches as it would save him $1 for each switch.