What is the answer to question number 32? Show solution if you can. Use the following data for the next three questions:Vacuum Company manufactures vacuum cleaners. Currently, it is operating at 60%capacity and producing 3,000 units monthly. To utilize the unused capacity, the company isconsidering manufacturing motor components at its own plant instead of purchasing themthee from an outside supplier at P33 per unit. Fixed overhead will increase by P3,000 per monthto support the in-house production of motors. The company estimates the monthlymanufacturing costs for 3,000 motors as follows:Direct materialsDirect laborVariable overheadFixed overheadTotalP36,00027,00018,00022,500P103,50030. Should the company make the motors in-house?a. Yes, because the total variable cost is less than the supplier's priceb. No, because the total variable cost is more than the supplier's price.c. Yes, because the total incremental cost is less than the supplier's price.d. No, because the total incremental cost is greater than the supplier's price.31. What is the relevant unit cost for this decision?a. P33.00b. P5.00c. P28.00d. P35.5032. Suppose that the unused capacity could be leased to another company for P4,000 permonth. Should the company make the motors in-house?a. Yes, because lease revenues are less than the cost savings resulting from in-housemanufacture of motors.b. No, because lease revenues are more than cost savings from in-house manufactureof motors.c. Yes, because total incremental costs are less than the supplier's price.d. No, because total incremental costs are more than the supplier's price.

Cost is the expenses which have been incurred for production, marketing and selling a product, from…

Answered: 32. Suppose that the unused capacity…

Principles of Accounting Volume 2

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Chapter3: Cost-volume-profit Analysis

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Problem 10EB: Keleher Industries manufactures pet doors and sells them directly to the consumer via their web...

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Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
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