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30. Pixie Co. produces Component 6417´ for use in dne of its electronic gadgets. Normal annual production for the item is 100,000 units. The Cost per 100 unit lot of the part are as follows: P 520 200 Direct Materials Direct Labor Manufacturing Overhead Variable Fixed 240 320 P 1,280 Total Manufacturing Costs per 100 units Bobbie Inc. offered to sell Pixie all 100,000 unit it will need during the coming year for P 1,200 per 100 units. If Pixie accepts the offer from bobbie, the facilities used to manufacture Component 6417 could be used 21 Scanned with CamScanner in the production of Component 8275. This change would save Pixie p 180,000 in relevant costs. In addition, a P 200,000 cost item included in fixed overhead is specifically related to Part. 6417 and would be eliminated, Pixie should a. Buy component 6417 because of P 300,000 savings b. Buy component 6417 because of P 140,000 savings Continue producing comnonent 6417 because of P 40,000 savings C.

30. Pixie Co. produces Component 6417´ for use in dne of its electronic gadgets. Normal annual production for the item is 100,000 units. The Cost per 100 unit lot of the part are as follows: P 520 200 Direct Materials Direct Labor Manufacturing Overhead Variable Fixed 240 320 P 1,280 Total Manufacturing Costs per 100 units Bobbie Inc. offered to sell Pixie all 100,000 unit it will need during the coming year for P 1,200 per 100 units. If Pixie accepts the offer from bobbie, the facilities used to manufacture Component 6417 could be used 21 Scanned with CamScanner in the production of Component 8275. This change would save Pixie p 180,000 in relevant costs. In addition, a P 200,000 cost item included in fixed overhead is specifically related to Part. 6417 and would be eliminated, Pixie should a. Buy component 6417 because of P 300,000 savings b. Buy component 6417 because of P 140,000 savings Continue producing comnonent 6417 because of P 40,000 savings C.

FINANCIAL ACCOUNTING
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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a. 30. Pixie Co. produces Component 6417 for use in dné of its electronic gadgets. Normal annual production for the item is 100,000 units. The Cost per 100 unit lot of the part are as follows: P 520 Direct Materials Direct Labor 200 Manufacturing Overhead Variable 240 320 Fixed Total Manufacturing Costs per 100 units P 1,280 Bobbie Inc. offered to sell Pixie all 100,000 unit it will need during the coming year for P 1,200 per 100 units. If Pixie accepts the offer from bobbie, the facilities used to manufacture Component 6417 could be used 21 Scanned with CamScanner in the production of Component 8275. This change would save Pixie p 180,000 in relevant costs. In addition, a P 200,000 cost item included in fixed overhead is specifically related to eliminated. Pixie should Part. 6417 and would be a. Buy component 6417 because of P 300,000 savings b. Buy component 6417 because of P 140,000 savings C. Continue producing component 6417 because of P 40,000 savings d. Continue producing component 6417 because of P 60,000 savings 31. Maeburg Inc. has excess production capacity. At times, it buys the same product from third party. Below are pertinent information: Selling Price per unit Fixed Cost per unit* Variable Cost per unit *at present utilized capacity P 70.00 20.00 35.00 The most it should pay for buying this product it currently makes would be the a. Selling price of P70 b. Total variable cost of producing the product of P35.00 per unit Total variable cost per unit of P35.00 plus the reduced fixed cost per unit after accounting for the effects of the added volume d. Total cost of production or P55.00 per unit 32. Union Co. manufactures plugs used in its electrical gadgets at a cost of P108 per unit that includes P24 of fixed overhead. It needs 30,000 of these plugs yearly, and Divisive Corp. offers to sell these items to Union at P99 per unit. If Union decides to purchase the plugs, P 180,000 of the annual fixed ovethead applied will be eliminated, and the company may be able to rent the facility previously used for manufacturing the plugs. If Union purchases the plugs but does not rent the unused facility, the company would a. Save P6.00 per unit b. Save P9.00 per unit C. c. Lose P 18.00 per unit d. Lose P9.00 per unit V33. Product A has a contribution margin
Transcribed Image Text:a. 30. Pixie Co. produces Component 6417 for use in dné of its electronic gadgets. Normal annual production for the item is 100,000 units. The Cost per 100 unit lot of the part are as follows: P 520 Direct Materials Direct Labor 200 Manufacturing Overhead Variable 240 320 Fixed Total Manufacturing Costs per 100 units P 1,280 Bobbie Inc. offered to sell Pixie all 100,000 unit it will need during the coming year for P 1,200 per 100 units. If Pixie accepts the offer from bobbie, the facilities used to manufacture Component 6417 could be used 21 Scanned with CamScanner in the production of Component 8275. This change would save Pixie p 180,000 in relevant costs. In addition, a P 200,000 cost item included in fixed overhead is specifically related to eliminated. Pixie should Part. 6417 and would be a. Buy component 6417 because of P 300,000 savings b. Buy component 6417 because of P 140,000 savings C. Continue producing component 6417 because of P 40,000 savings d. Continue producing component 6417 because of P 60,000 savings 31. Maeburg Inc. has excess production capacity. At times, it buys the same product from third party. Below are pertinent information: Selling Price per unit Fixed Cost per unit* Variable Cost per unit *at present utilized capacity P 70.00 20.00 35.00 The most it should pay for buying this product it currently makes would be the a. Selling price of P70 b. Total variable cost of producing the product of P35.00 per unit Total variable cost per unit of P35.00 plus the reduced fixed cost per unit after accounting for the effects of the added volume d. Total cost of production or P55.00 per unit 32. Union Co. manufactures plugs used in its electrical gadgets at a cost of P108 per unit that includes P24 of fixed overhead. It needs 30,000 of these plugs yearly, and Divisive Corp. offers to sell these items to Union at P99 per unit. If Union decides to purchase the plugs, P 180,000 of the annual fixed ovethead applied will be eliminated, and the company may be able to rent the facility previously used for manufacturing the plugs. If Union purchases the plugs but does not rent the unused facility, the company would a. Save P6.00 per unit b. Save P9.00 per unit C. c. Lose P 18.00 per unit d. Lose P9.00 per unit V33. Product A has a contribution margin
26. Great Electronics is operating at 70% capacity. The plant manager is considering making component 501 now being purchased for P110 each, a price that is projected to increase in the near future. The plant has the equipment and labor force required to manufacture the component. The design engineer estimates that each component requires P40 of direct materials and P30 of direct labor. The plant overhead is 200% of direct labor peso cost, and 40% of the overhead is fixed cost. A decision to manufacture component 501 will result in a gain or (loss) for each component of а. Р 28 b. P 16 с. Р (20) d. P 4 6/20 20 Scanned with CamScanner 22 S. Kent Co. has a limited number of machinę hours that it can use for manufacturing two products, A and B. Each product has a selling príce of P160 per unit but product A has 40% contribution margin and product B has a 70% contribution margin. One unit of B takes twice as many machine hours to make as a unit of A. Assume either product can be sold in whatever quantity is produced. Which product or products should the limited number of machine hours be used for? b. Both A and B c. Either A and B d. B а. А 28. Ysabelle Industries Inc. has an opportunity to acquire a new equipment to replace one of its existing equipments. The new equipment would cost P 900,000 and has a five-year useful life, with zero disposal price. Variable operating costs would be P1 million per year. The present equipment has a book value of P S00,000, and a remaining useful life of five years. Its disposal price now is P 50,000 bit would be zero after five years. Variable operating costs would" be P 1,250,000 per year. Considering the five years in total but ignoring the time value of money and income taxes, Ysabelle should a. Replace due to P 400,000 advantage b. Not replace due to P 150,000 disadvantage c. Replace due to P 350,000 advantage d. Not replace due to 'P 100,000 disadvantage 29. Tagaytay Open-air flea market is along the highway leading to Taal Vista Lodge. Arnel has a stall which speċializes in hand-crafted fruit baskets that sells for P60 each. Daily fixed costs are P15,000 and variable costs are P30 per basket. An average of 750 baskets is sold each day. Arnel has a capacity of 800 baskets per day. By closing time yesterday, a bus load of teachers who attended a seminar at the' Development Academy of the Philippines stopped by Arnel's stall. Collectively, they offered Arnel P 1,500 for. 40 baskets. Arnel should have Rejected the offer since he could have lost P500 Rejected the offer since he could have lost P900 Accepted the offer since he could have P300 contribution margin а. b. C. d. Accepted the offer since he could have P700 contribution margin : in Anė of its electronic
Transcribed Image Text:26. Great Electronics is operating at 70% capacity. The plant manager is considering making component 501 now being purchased for P110 each, a price that is projected to increase in the near future. The plant has the equipment and labor force required to manufacture the component. The design engineer estimates that each component requires P40 of direct materials and P30 of direct labor. The plant overhead is 200% of direct labor peso cost, and 40% of the overhead is fixed cost. A decision to manufacture component 501 will result in a gain or (loss) for each component of а. Р 28 b. P 16 с. Р (20) d. P 4 6/20 20 Scanned with CamScanner 22 S. Kent Co. has a limited number of machinę hours that it can use for manufacturing two products, A and B. Each product has a selling príce of P160 per unit but product A has 40% contribution margin and product B has a 70% contribution margin. One unit of B takes twice as many machine hours to make as a unit of A. Assume either product can be sold in whatever quantity is produced. Which product or products should the limited number of machine hours be used for? b. Both A and B c. Either A and B d. B а. А 28. Ysabelle Industries Inc. has an opportunity to acquire a new equipment to replace one of its existing equipments. The new equipment would cost P 900,000 and has a five-year useful life, with zero disposal price. Variable operating costs would be P1 million per year. The present equipment has a book value of P S00,000, and a remaining useful life of five years. Its disposal price now is P 50,000 bit would be zero after five years. Variable operating costs would" be P 1,250,000 per year. Considering the five years in total but ignoring the time value of money and income taxes, Ysabelle should a. Replace due to P 400,000 advantage b. Not replace due to P 150,000 disadvantage c. Replace due to P 350,000 advantage d. Not replace due to 'P 100,000 disadvantage 29. Tagaytay Open-air flea market is along the highway leading to Taal Vista Lodge. Arnel has a stall which speċializes in hand-crafted fruit baskets that sells for P60 each. Daily fixed costs are P15,000 and variable costs are P30 per basket. An average of 750 baskets is sold each day. Arnel has a capacity of 800 baskets per day. By closing time yesterday, a bus load of teachers who attended a seminar at the' Development Academy of the Philippines stopped by Arnel's stall. Collectively, they offered Arnel P 1,500 for. 40 baskets. Arnel should have Rejected the offer since he could have lost P500 Rejected the offer since he could have lost P900 Accepted the offer since he could have P300 contribution margin а. b. C. d. Accepted the offer since he could have P700 contribution margin : in Anė of its electronic
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