35) The managerial accountant at Sellers Manufacturing produces a product, Part Z that the companyuses to make multiple products at its facility in Virginia. The managerial accountant reported to theoperations manager that 12% of its fixed overhead costs assigned to Part Z will not continue if SellersManufacturing outsources the production of Product Z at $44 per unit to Manufacturing World. Themanagerial accountant reported that to produce 1,200 units of Product Z, Sellers Manufacturing incursthe following costs:10Should Sellers Manufacturing produce Part Z or outsource it to Manufacturing World?(hint: first find the total cost including variable and fixed cost for making part Zs and then compare this to the priceof outsourcing considering the price of buying the parts and the unavoidable costs.)

To determine whether Sellers Manufacturing should produce Part Z or outsource it to Manufacturing…

Answered: 35) The managerial accountant at…

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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Alfanar Company produces a part used in the manufacture of one of its products. The unit product cost of the part is $33, computed as follows: Direct Material: 12 $ Direct Labor: 8$ Variable Manufacturing Overhead: 3 $ Fixed Manufacturing Overhead: 10 $ Unit Prodcut Cost : 33 $ An outside supplier has offered to provide the annual requirement of 10,000 of the parts for only $27 each. The company estimates that 30% of the fixed manufacturing overhead costs above will continue if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the per unit dollar advantage or disadvantage of purchasing the parts from the outside supplier would be: A.$3 advantage B. $1 advantage C. $1 disadvantage D. $4 disadvantage
Penagos Corporation is presently making part Z43 that is used in one of its products. A total of 5,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direct materials. Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead An outside supplier has offered to produce and sell the part to the company for $20.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $4,000 of these allocated general overhead costs would be avoided. If management decides to buy part Z43 from the outside supplier rather than to…
Give me correct answer with explanation.vi
The Grouper Company manufactures 1,478 units of a part that could be purchased from an outside supplier for $14 each. Grouper’s costs to manufacture each part are as follows: Direct materials $2 Direct labor 4 Variable manufacturing overhead 3 Fixed manufacturing overhead 8 Total $17 All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses. (a) Calculate relevant cost to make. Relevent cost to make $ ___ per unit (c) Calculate net cost to buy if Grouper leases the manufacturing facilities to another company for $9,260 per year. Net cost to buy $ ______
Andretti Company has a single product called a Dak. The company normally produces and sells 86,000 Daks each year at a selling price of $62 per unit. The company’s unit costs at this level of activity are given below: Direct materials $ 9.50 Direct labor 9.00 Variable manufacturing overhead 3.20 Fixed manufacturing overhead 5.00 ($430,000 total) Variable selling expenses 4.70 Fixed selling expenses 4.00 ($344,000 total) Total cost per unit $ 35.40 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume Andretti Company has sufficient capacity to produce 111,800 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 30% above the present 86,000 units each year if it increased fixed selling expenses by $130,000. What is the financial advantage (disadvantage) of investing an additional $130,000 in fixed selling expenses? 1-b.…
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Ross Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: Variable costs per unit: Direct materials $81 Fixed costs per year Direct labor $1,008,000 Fixed manufacturing overhead $2,520,000 Fixed selling and administrative $1,440,000 The company does not have any variable manufacturing overhead costs or variable selling and administrative costs. During its first year of operations, the company produced 36,000 units and sold 30,000 units. There was no ending work-in-process inventory. The company's only product is sold for $251 per unit. 9.1 What is the unit product cost under super-variable costing? 9.2 What is the net operating income under super-variable costing? 9.3 Assume that the company uses a variable costing system that assigns $28 of direct labor cost to each unit that is produced. How much higher or lower is variable costing income compared to that under super-variable costing? 9.4 Assume that the company…
Jordan Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs Allocated facility-level costs $ 5,700 6,800 3,900 8,100 27,200 One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Jordan for $2.90 each. Required a. Calculate the total relevant cost. Should Jordan continue to make the containers? b. Jordan could lease the space it currently uses in the manufacturing process. If leasing would produce $12.300 per rhonth, calculate the total avoidable costs. Should Jordan continue to make the containers? a. Total relevant cost Should Jordan continue to make the containers? b. Total avoidable cost Should Jordan continue to make the containers?
Cotton Corp. currently makes 12,500 subcomponents a year in one of its factories. The unit costs to produce are: Per unit Direct materials $ 24.00 Direct labor 20.00 Variable manufacturing overhead 19.00 Fixed manufacturing overhead 9.00 Total unit cost $ 72.00 An outside supplier has offered to provide Cotton Corp. with the 12,500 subcomponents at an $76.00 per unit price. Fixed overhead is not avoidable. If Cotton Corp. accepts the outside offer, what will be the effect on short-term profits? Multiple Choice no change $78,750 increase $112,500 increase $162,500 decrease
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Delta produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $ 90,000 Direct labor 130,000 Variable factory overhead Fixed factory overhead 140,000 Total costs $420,000 60,000 Of the fixed factory overhead costs, $60,000 is avoidable. 20) Conners has offered to sell 10,000 units of the same part to Delta for $36 per unit. Assuming there is no other use for the facilities, what is the effect on operating income if Delta buys from Conners? 21) Assuming no other use of their facilities, at what buying price per unit for Delta would Delta's operating income be the same whether they made the part or bought it from Conners?
A company makes 36,000 motors to be used in the production of its blender. The average cost per motor at this level of activity is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead An outside supplier recently began producing a comparable motor that could be used in the blender. The price offered to the company for this motor is $23.95. There would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. The annual financial advantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be: Multiple Choice O O O ($68,400) $214,200 $9.50 $ 8.50 $ 3.45 $ 4.40 90,000 $158,400

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