A company produces three components on the same machine. The components are used ithe manufacture of a finished product. The budget for next year indicates a requirementfor 3,000 units of each component, but only 60,000 hours of machine time will beavailable. Additional components can be purchased from an external supplier to meet anyproduction shortfall.Purchase price fromexternal supplier$ per unit65781280What is the minimum total variable cost at which the 3,000 units of all three componentscan be obtained?Component Machine hours Variable productionper unitcost per unit$ per unit45ABCO $537,000$543,000$549,000$553,000OO957056

Buy cost is the cost of purchasing the product from outside.Make cost is the cost of making/…

Answered: A company produces three components on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Melbourne Corporation has traditionally made a subcomponent of its major product. Annual production of 30,000 subcomponents results in the following costs: Direct materials $ 250,000 Direct labor $ 200,000 Variable manufacturing overhead $ 190,000 Fixed manufacturing overhead $ 120,000 Melbourne has received an offer from an outside supplier who is willing to provide the 30,000 units of the subcomponent each year at a price of $28 per unit. There would be no effect of this decision on the total fixed manufacturing overhead of the company. Melbourne knows that the facilities now being used to manufacture the subcomponent could be rented to another company for revenue of $80,000 per year if the subcomponent were purchased from the outside supplier. The financial advantage (disadvantage) of making the subcomponent would be: Multiple Choice $0 $280,000 $120,000 $200,000
A manufacturer is considering whether to make or buy a component used in its production. The annual cost of producing the 10,000 parts is as follows. Direct variable manufacturing costs $ 300,000Direct fixed manufacturing costs $ 100,000Allocated overhead $ 50,000 If the manufacture buys the component, the direct fixed manufacturing costs can be reduced by 73 per cent. What is the maximum unit purchasing price that makes purchasing a beneficial decision in comparison to making?
Division A has the capacity to produce 120,000 units. The normal selling price of each unit is P80. The variable cost incurred for each unit is P42. Total direct fixed cost for the relevant range is P1,150,000. Division B can use the products of Division A as an input in its manufacturing process but is currently acquiring the said products from an outside supplier. The price per unit is P75. Total annual demand is 30,000 units. 1. Assuming sufficient capacity, what is the minimum acceptable transfer price to Division A? 2. Assuming only 22,500 excess capacity, what is the minimum acceptable transfer price to Division A? 3. Assuming no excess capacity, what is the minimum acceptable transfer price to Division A? 4. What is the maximum acceptable transfer price to Division B?
Division A has the capacity to produce 120,000 units. The normal selling price of each unit is P80. The variable cost incurred for each unit is P42. Total direct fixed cost for the relevant range is P1,150,000. Division B can use the products of Division A as an input in its manufacturing process but is currently acquiring the said products from an outside supplier. The price per unit is P75. Total annual demand is 30,000 units. Assuming sufficient capacity, what is the minimum acceptable transfer price to Division A? Assuming only 22,500 excess capacity, what is the minimum acceptable transfer price to Division A? Assuming only 22,500 excess capacity and that Division A can avoid variable selling cost per unit of P4 but will incur a one-time fixed cost of P30,000 for the order, what is the minimum acceptable transfer price to Division A? Assuming no excess capacity, what is the minimum acceptable transfer price to Division A? What is the maximum acceptable transfer…
need answer with brief explanation
Whispering Winds Inc. has been manufacturing capacity, and variable manufacturing and direct labour costs per unit to make the A supplier offers to make the lampshades per year. variable manufacturing costs will be its own shades for its table lamps. The company is currently operating at 100% of overhead is charged to production at the rate of 50% of direct labour costs. The direct materials lampshades are $4.70 and $5.60, respectively. Normal production is 48,800 table lamps at a price of $13.50 per unit. If Whispering Winds Inc. accepts the supplier's offer all eliminated, but the $41.300 of fixed manufacturing overhead currently being charged to the lampshades will have to be absorbed by other products
9

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS