A department makes a product whose contribution per unit is £1,000, and which takes 20 hours machine time. A component used in this product with a marginal cost of £300 (taking 5 hours of machine time) could be purchased from an external Supplier. The department is working at full capacity. What is the maximum price that the company may pay to buy the component from an external supplier? £575 £550 £500 £600

A department makes a product whose contribution per unit is £1,000, and which takes 20 hours machine time. A component used in this product with a marginal cost of £300 (taking 5 hours of machine time) could be purchased from an external Supplier. The department is working at full capacity. What is the maximum price that the company may pay to buy the component from an external supplier? £575 £550 £500 £600

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter12: Activity-based Management

Section: Chapter Questions

Problem 19E: A company is spending 70,000 per year for inspecting, 60,000 per year for purchasing, and 56,000 per...

See similar textbooks

Similar questions

See picture
Collyer Ltd has a valve division that manufactures and sells a standard valve as follows: Capacity in units Selling price to outside customers on intermediate market Variable costs per unit Fixed costs per unit (based on capacity) 100,000 £30 £16 £9 The company has a pump Division that could use this valve in the manufacture of one of its pumps. The pump Division is currently purchasing 10,000 valves per year from an overseas supplier at a cost of £29 per valve. Required: 1. Assume that the valve Division has ample idle capacity to handle all of the Pump division's needs. What is the acceptable range, if any, for the transfer price between the two division? (5 marks) 2. Assume that the valve Division is selling all that it can produce to outside customers on the intermediate market. What is the acceptable range, if any, for the transfer price between the two divisions? (5 marks) 3. Assume that the valve Division is selling all that it can produce to outside customers on the…
Rossini Ltd uses target costing and has designed a new machine that is estimated to sell on the market at a price of £10,280. The company wishes to make a profit margin of 20% and currently estimates from the design work undertaken that it will cost £8,640. Based on the above figures, what will the target cost gap be? a) £2,056 b) £8,224 c) £1,728 d) £416
Suppose that a manufacturer can produce a part for $11.00 with a fixed cost of $7,000. Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $13.00, which includes transportation. a. If the anticipated production volume is 1,300 units, compute the total cost of manufacturing and the total cost of outsourcing. b. What is the best decision? a. The total cost of manufacturing is $.
A manufacturer of plastic traffic cones sells the cones at a wholesale cost of £8 pounds per cone. The variable cost for each cone is £3. The annual overhead cost for the production line is £100,000. Current production is 30,000 cones/units per annum. What is the annual profit generated by this production line? O £50,000 £240,000 £90,000 £150,000 £50,000 Hide hint for Question 1 Tho que icackina for thn annualprofit and not tho contrribution. tin DELL
Jersey Ltd uses target costing and has designed a new machine that is estimated to sell on the market at a price of £10,280. The company wishes to make a profit margin of 20% and currently estimates from the design work undertaken that it will cost £8,640. Based on the above figures, what will the target cost gap be? a)£2,056 b)£8,224 c)£416 d)£1,728
A company has a process that results in 14000 pounds of Product A that can be sold for $8 per pound. An alternative would be to process Product A further at a cost of $93800 and then sell it for $14 per pound. Should management sell Product A now or should Product A be processed further and then sold? What is the effect of the action? Sell now, the company will be better off by $9800. Process further, the company will be better off by $84000. Process further, the company will be better off by $9800. Sell now, the company will be better off by $93800.
urgent please
XYZ manufactures a computer stand. It has fixed costs of $600,000 and each stand sells for $90, with a variable cost of S$ 48 per unit. Determine the sales value that XYZ manufactures will have to reach if it is to make $20,000 profit per period. a. 12,917 b. 14762 C. 11,920 d. 728,000
A company is negotiating with a potential supplier for the purchase of 100,000 widgets. The company estimates that the supplier’s variable costs are $5 per unit andthat the fixed costs, depreciation, overhead, and so on, are $50,000. The supplierquotes a price of $10 per unit. Calculate the estimated average cost per unit. do youthink $10 is too much to pay? Could the purchasing department negotiate a betterprice? How?
Please help me
Please I will need the answer to a and b.