A Mark uses 1,100 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows. Direct materials $58.89 Direct labor 39.08 Overhead 126.50 Total $224.47 Overhead costs include variable material handling costs of $6.50, which are applied to products on the basis of direct material costs. The remainder of the overhead costs are applied on the basis of direct labor dollars and consist of 60% variable costs and 40% fixed costs. A vendor has offered to supply the IMC2 component at a price of $250 per unit. (a) Prepare the incremental analysis for the decision to make or buy IMC2. (Round answers to 2 decimal places, e.g. 12.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Make IMC2 (per unit) Buy IMC2 (per unit) Net Income Increase (Decrease)
A Mark uses 1,100 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows. Direct materials $58.89 Direct labor 39.08 Overhead 126.50 Total $224.47 Overhead costs include variable material handling costs of $6.50, which are applied to products on the basis of direct material costs. The remainder of the overhead costs are applied on the basis of direct labor dollars and consist of 60% variable costs and 40% fixed costs. A vendor has offered to supply the IMC2 component at a price of $250 per unit. (a) Prepare the incremental analysis for the decision to make or buy IMC2. (Round answers to 2 decimal places, e.g. 12.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Make IMC2 (per unit) Buy IMC2 (per unit) Net Income Increase (Decrease)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A
Mark uses 1,100 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to
manufacture the component are as follows.
Direct materials
$58.89
Direct labor
39.08
Overhead
126.50
Total
$224.47
Overhead costs include variable material handling costs of $6.50, which are applied to products on the basis of direct material costs.
The remainder of the overhead costs are applied on the basis of direct labor dollars and consist of 60% variable costs and 40% fixed
costs.
A vendor has offered to supply the IMC2 component at a price of $250 per unit.
(a)
Prepare the incremental analysis for the decision to make or buy IMC2. (Round answers to 2 decimal places, e.g. 12.25. Enter negative
amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Make IMC2 (per unit)
Buy IMC2 (per unit)
Net Income
Increase (Decrease)
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