1.Star123 sells vacuum cleaners at unitary price of 1.000 €, with a volume of 2.000/year.There is a component X that could be bought outside. Star123 receives a bid for it at 50.If the company incurred the following costs in the previous year, decide if it is convenient toproduce internally or to buy outside.Referred to 2.000 piecesRaw materialPackaging20.0002.500Direct labour50.000DepreciationIndustrial costsAdministrative costs10.0008.0006.000Additional information:Direct labour referred to 5 workers: 2 of them will retire, 1 will be moved to the productionof component Y; 1 will decide to become a part time worker at 60 %, staying in theproduction of vacuum cleaners; the last one is impossible to place, due to the lack ofcompetence required to be employed in other departments- Depreciation refers to a machine dedicated to component X; if “buy", the machine will bereused in department Y, with a total evaluation of 48.000 and a residual life of 6 yearsIndustrial costs are referred to the whole plantAdministrative costs are spread out on the product using raw material as cost driver

Component X is required for production of vaccum cleaner, • it could be bought outside @ 50 per…

1. Star123 sells vacuum cleaners at unitary price of 1.000 €, with a volume of 2.000/year. There is a component X that could be bought outside. Star123 receives a bid for it at 50. If the company incurred the following costs in the previous year, decide if it is convenient to produce internally or to buy outside. Referred to 2.000 pieces 20.000 2.500 50.000 Raw material Packaging Direct labour Depreciation Industrial costs Administrative costs 10.000 8.000 6.000 Additional information: Direct labour referred to 5 workers: 2 of them will retire, 1 will be moved to the productic of component Y; 1 will decide to become a part time worker at 60 %, staying in the production of vacuum cleaners; the last one is impossible to place, due to the lack of competence required to be employed in other departments Depreciation refers to a machine dedicated to component X; if “buy", the machine will be reused in department Y, with a total evaluation of 48.000 and a residual life of 6 years Industrial costs are referred to the whole plant Administrative costs are spread out on the product using raw material as cost driver

1. Star123 sells vacuum cleaners at unitary price of 1.000 €, with a volume of 2.000/year. There is a component X that could be bought outside. Star123 receives a bid for it at 50. If the company incurred the following costs in the previous year, decide if it is convenient to produce internally or to buy outside. Referred to 2.000 pieces 20.000 2.500 50.000 Raw material Packaging Direct labour Depreciation Industrial costs Administrative costs 10.000 8.000 6.000 Additional information: Direct labour referred to 5 workers: 2 of them will retire, 1 will be moved to the productic of component Y; 1 will decide to become a part time worker at 60 %, staying in the production of vacuum cleaners; the last one is impossible to place, due to the lack of competence required to be employed in other departments Depreciation refers to a machine dedicated to component X; if “buy", the machine will be reused in department Y, with a total evaluation of 48.000 and a residual life of 6 years Industrial costs are referred to the whole plant Administrative costs are spread out on the product using raw material as cost driver

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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show solution for required a b c d give complete solution