A company manufactures machines and has always produced all of the necessary parts for the machines as well (including batteries).An outside supplier has offered to sell one type of battery to the company for a cost of $37 per unit. For the company's ownproduction of this battery, they compiled the following information:23,000UnitsPerUnit$ 16 $Per YearDirect materialsDirect laborVariable manufacturing overheadFixed manufacturing overhead, battery*Fixed manufacturing overhead, allocated368,000207,00092,000138,000207,000$ 44 $1,012,00046*Total cost"One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value).If the batteries were purchased, the allocated fixed manufacturing cost would not be eliminated. If the company no longer producedthe battery, it would be able to use the freed capacity to launch a new product. The segment margin of the new product would be$230,000 per year. What would be the financial advantage or disadvantage of buying 23,000 batteries from the outside supplier? If adisadvantage, place the number in parentheses (e.g., (50000)).

Financial advantage (disadvantage) of buying from outside supplies needs the comparison of relevant…

A company manufactures machines and has always produced all of the necessary parts for the machines as well (including batte An outside supplier has offered to sell one type of battery to the company for a cost of $37 per unit. For the company's own production of this battery, they compiled the following information: 23,000 Units Unit Per Year $ 16 $ 368,000 Per Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, battery Fixed manufacturing overhead, allocated 207,000 92,000 138,000 207,000 $ 44 $1,012,000 4 6* 9. Total cost "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). If the batteries were purchased, the allocated fixed manufacturing cost would not be eliminated. If the company no longer produe the battery, it would be able to use the freed capacity to launch a new product. The segment margin of the new product would be $230,000 per year. What would be the financial advantage or disadvantage of buying 23,000 batteries from the outside supplier? disadvantage, place the number in parentheses (e.g., (50000)).

A company manufactures machines and has always produced all of the necessary parts for the machines as well (including batte An outside supplier has offered to sell one type of battery to the company for a cost of $37 per unit. For the company's own production of this battery, they compiled the following information: 23,000 Units Unit Per Year $ 16 $ 368,000 Per Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, battery Fixed manufacturing overhead, allocated 207,000 92,000 138,000 207,000 $ 44 $1,012,000 4 6* 9. Total cost "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). If the batteries were purchased, the allocated fixed manufacturing cost would not be eliminated. If the company no longer produe the battery, it would be able to use the freed capacity to launch a new product. The segment margin of the new product would be $230,000 per year. What would be the financial advantage or disadvantage of buying 23,000 batteries from the outside supplier? disadvantage, place the number in parentheses (e.g., (50000)).

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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