A manufacturer produces hacksaw blades. Recently, the manufacturer has decided to enhance its product line and offer band blades. Two alternatives are being analyzed: purchase band blades overseas or produce them in-house. If the band blades are made in-house, the manufacturer will not be able to produce hacksaw blades, forgoing a $30,000 profit contribution. Revenue from sale of band blades $180,000 Outside purchase 170,000 Direct material and labor 100,000 Variable manufacturing overhead 50,000 Avoidable fixed manufacturing overhead 10,000 Calculate the incremental cost of making and purchasing band blades, respectively.
A manufacturer produces hacksaw blades. Recently, the manufacturer has decided to enhance its product line and offer band blades. Two alternatives are being analyzed: purchase band blades overseas or produce them in-house. If the band blades are made in-house, the manufacturer will not be able to produce hacksaw blades, forgoing a $30,000 profit contribution. Revenue from sale of band blades $180,000 Outside purchase 170,000 Direct material and labor 100,000 Variable manufacturing overhead 50,000 Avoidable fixed manufacturing overhead 10,000 Calculate the incremental cost of making and purchasing band blades, respectively.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A manufacturer produces hacksaw blades. Recently, the manufacturer has decided to enhance its product line and offer band blades. Two alternatives are being analyzed: purchase band blades overseas or produce them in-house. If the band blades are made in-house, the manufacturer will not be able to produce hacksaw blades, forgoing a $30,000 profit contribution.
Revenue from sale of band blades $180,000
Outside purchase 170,000
Direct material and labor 100,000
Variable manufacturing
Avoidable fixed manufacturing overhead 10,000
Calculate the incremental cost of making and purchasing band blades, respectively.
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