2. A company is contemplating whether to accept a new project which requires the following three types of labour Hours Additional information required existing staff are fully utilized. The c a company will hire Carpentry 12,500 Paid at $8 per hour and er new staff to meet this additional demand. Masonry 2,200 Paid at $12 per hour. These employees are difficult to recruit and the company retains a number of permanently employed staff, even if there is no work to do. There is currently 800 hours of idle time available and any additional hours would be fulfilled by temporary staff that would be paid at $14/hour.

2. A company is contemplating whether to accept a new project which requires the following three types of labour Hours Additional information required existing staff are fully utilized. The c a company will hire Carpentry 12,500 Paid at $8 per hour and er new staff to meet this additional demand. Masonry 2,200 Paid at $12 per hour. These employees are difficult to recruit and the company retains a number of permanently employed staff, even if there is no work to do. There is currently 800 hours of idle time available and any additional hours would be fulfilled by temporary staff that would be paid at $14/hour.

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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Required information (The following information applies to the questions displayed below} Each of the following situations is independent: Make vs. Buy (Sourcing Decision) Eggers Company needs 27,000 units of a part to use in producing one of its products. If Eggers buys the part from McMillan Company for $110 instead of making it, Eggers will not use the released facilities in another manufacturing activity. Forty percent of the fixed overhead will continue irrespective of CEO Donald Mickey's decision. The cost data are as follows: Cost to make the part: Direct materials $ 42 18 26 30 Direct labor Variable overhead Fixed overhead $116 Required: 1. Determine which alternative is more attractive to Eggers, and by what amount. Alternative Saving Make the part per unit
The B Company produces a part that is used in the final assembly of its main follows: Operation1 Operation 2 Materials P240,000 180,000 Direct labor P180,000 Variable overhead 100,000 100,000 Fixed overhead (allocated) 120,000 60,000 Operation 1 can be eliminated if these parts are purchased from an outside vendor. The vendor will supply 400,000 units a year at P2.00 per unit. These parts would still have to be processed through Operation 2. The B Company would have to pay freight charges of P20,000 a year on the purchased parts. If Operation 1 is eliminated, the space can be rented for P25,000 per year. REQUIRED: 1. Should the company purchase the parts or continue making them internally? Use the total approach first. Then use the incremental analysis next.
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Ken Owens Construction specializes in small additions and repairs. His normal charge is $500/day plus materials. Due to his physical condition, David, an elderly gentleman, needs a downstairs room converted to a bathroom. Ken has produced a bid for $5,000 to complete the bathroom. He did not provide David with the details of the bid. However, they are shown here. Ken's Bid Detail Dollars Direct Material $2,100 Direct Labor 1,700 Variable overhead 100 Fixed overhead 700 Profit 400 $5,000 A. The town's social services has asked Ken if he could reduce his bid to $3,900. Should Ken accept the counter offer? Current Bid New Bid Direct Material $2,100 $2,100 Direct Labor 1,700 1,700 Variable overhead 100 100 Fixed overhead 700 Profit 400 $5,000 $3,900 No v B. How much would his income be reduced? C. If the town's social services guaranteed him another job next month at his normal price, could he accept this job at $3,900? Yes v Feedback
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SnowGlo Company manufactures snowboards. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected as follows: Month Lease cost Machine hours April $15,000 800 May 10,000 600 June 12,000 770 July 16,000 1,000 Using the high-low method, calculate the variable rate for the lease cost. $25 $59 $15 $65