Arton Company, a manufacturer of snowmobiles, is operating at 70% of plant capacity. Parton's plant manager is considering making the headlights now being purchased from an outside supplier for $13.00 each. The Parton plant has idle equipment that could be used to manufacture the headlights. The design engineer estimates that each headlight requires $4.50 of direct materials, $3.50 of direct labor, and $6.50 of manufacturing overhead. Forty percent of the manufacturing overhead is a fixed cost that would be unaffected by this decision. A decision by Parton Company to manufacture the headlights should result in a net gain (loss) for each headlight of: (CMA adapted) $(1.50). $2.40. $1.10. $3.15.
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Arton Company, a manufacturer of snowmobiles, is operating at 70% of plant capacity. Parton's plant...
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