Barbardy Company is introducing a new product. The managers are trying to decide whether to makeone of its components or buy it from a supplier at a price of P320. The space that could be used toproduce the component would have no other use. The following are the data to make thecomponent.MaterialsP 90Labor100Variable manufacturing overhead90Fixed manufacturing overhead130Total410The estimate reflects 20,000 volume units of the component. Fixed manufacturing overhead consistsof depreciation on old machinery.Required: Determine which option is advantageous and by how much?1. Buy is advantageous by P800,0002. Make is advantageous by P800,0003. Buy is advantageous by P1,800,0004. Make is advantageous by P1,800,000

The difference between making and buying depends on the cost incurred for production and purchase…

arbardy Company is introducing a new product. The managers are trying to decide whether to ma- ne of its components or buy it from a supplier at a price of P320. The space that could be used to roduce the component would have no other use. The following are the data to make the omponent. aterials P 90 bor 100 ariable manufacturing overhead 90 xed manufacturing overhead 130 otal 410 ne estimate reflects 20,000 volume units of the component. Fixed manufacturing overhead consist depreciation on old machinery. equired: Determine which option is advantageous and by how much? .. Buy is advantageous by P800,000 E. Make is advantageous by P800,000 . Buy is advantageous by P1,800,000 -. Make is advantageous by P1,800,000

arbardy Company is introducing a new product. The managers are trying to decide whether to ma- ne of its components or buy it from a supplier at a price of P320. The space that could be used to roduce the component would have no other use. The following are the data to make the omponent. aterials P 90 bor 100 ariable manufacturing overhead 90 xed manufacturing overhead 130 otal 410 ne estimate reflects 20,000 volume units of the component. Fixed manufacturing overhead consist depreciation on old machinery. equired: Determine which option is advantageous and by how much? .. Buy is advantageous by P800,000 E. Make is advantageous by P800,000 . Buy is advantageous by P1,800,000 -. Make is advantageous by P1,800,000

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

Waterway Industries, Inc. can produce 100 units of a component part with the following costs: Direct Materials Direct Labor Variable Overhead Fixed Overhead $22000 6000 14000 15500 If Waterway Industries, Inc. can purchase the component part externally for $49000 and only $4000 of the fixed costs can be avoided. what is the correct make-or-buy decision? O Make and save $3000 O Buy and save $4500 O Make and save $4500 O Buy and save $7000
Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials $8,400 Direct labor 11,250 Variable overhead 12,600 Fixed overhead 16,200 An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit. If Clemente could avoid $3,000 of fixed overhead by accepting the offer, net income would increase (decrease) by Group of answer choices $750. $(3,150). $(5,850). $6,750.
The following production costs are provided for AudioPro Company, a manufacturer of high-quality headphones. Manufacturing Costs: Direct Materials Direct Labor Variable Overhead Fixed Overhead Total It has been determined that the headphones could be purchased from Integrated Labs at a cost of $135 plus $8 shipping costs. Assume 40% of fixed overhead allocated to making headphones relates to a production manager who would not be retained if the headphones were not produced by AudioPro. Required: a. Considering the offer from Integrated Labs, show whether AudioPro should make or buy the product. b. How would your analysis change if AudioPro could use capacity resources for alternative activities that would produce a contribution of $35 per unit? Complete this question by entering your answers in the tabs below. Required A Required B Considering the offer from Integrated Labs, show whether AudioPro should make or buy the product. Purchase Cost Headphones Shipping Cost Manufacturing Cost:…
None
Scootz could sell its scooters to retailers either assembled or unassembled. The cost of an unassembled scooters is as follows. Direct materials $150 Direct labor 70 Variable overhead (0.70 of direct labor) 49 Fixed overhead (0.30 of direct labor) 21 Manufacturing cost per unit $290 The unassembled scooters are sold to retailers at $450 each. Scootz currently has unused productive capacity that is expected to continue indefinitely; management has concluded that some of this capacity can be used to assemble the scooters and sell them at $495 each. Assembling the scooters will increase direct materials by $5 per scooter, and direct labor by $10 per scooter. Additional variable overhead will be incurred at the normal rates, but there will be no additional fixed overhead as a result of assembling the scooters. You are required to: (a) Prepare an incremental analysis for the sell-or-process-further decision. (b) Should Speedy sell unassembled or process further?
San Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials $8,400 Direct labor 11,250 Variable overhead 12,600 Fixed overhead 16,200 An outside supplier has offered to sell San Clemente the subcomponent for $2.85 a unit. If San Clemente accepts the offer, by how much will net income increase (decrease)?
Vikrambahi
Crane Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows. Direct materials Direct labor Variable overhead Fixed manufacturing costs (a) Capital-Intensive $6.00 per unit $7.00 per unit $4.00 per unit $3,200,000 Crane' market research department has recommended an introductory unit sales price of $40.00. The selling expenses are estimated to be $622,000 annually plus $2.00 for each unit sold, regardless of manufacturing method. 1. Capital-intensive manufacturing method. 2. Labor-intensive manufacturing method. Break-even point in units Labor-Intensive $7.00 per unit $10.00 per unit $5.50 per unit Calculate the estimated break-even point in annual unit sales of the new product if Crane Company uses the: $2,028,500 Capital-Intensive Labor-Intensive
Cox Electric makes electronic components and has estimated the following for a new design of one of its products: Fixed cost = $10,000 Material cost per unit = $ 0.15 Labor cost per unit = $ 0.10 Revenue per unit = $ 0.65 These data are given in the file CoxElectric. Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Assuming Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost rom total revenue. Create a spreadsheet model and construct a 1-way table and determine the breakeven point (use intervals of 10,000 units). Group of answer choices 20,000 - 30,000 10,000 - 20,000 30,000 - 40,000 25,000 30,000 20,000
Wings Incorporated manufactures machine parts for aircraft engines. The CEO, Chucky Valters, was considering an offer from a subcontractor that would provide 2,400 units of product PQ107 for Valters for a price of $150,000. If Wings does not purchase these parts from the subcontractor it must produce them in-house with the following unit costs: Direct materials Direct labor Variable overhead Cost per Unit $31 19 8 In addition to the above costs, if Wings produces part PQ107, it would have a retooling and design cost of $9,800. The relevant costs of producing 2,400 units of product PQ107 internally are:
Chip Jones ahoy manufactures the cloth for sails. The company has the capacity to produce 36,000 sails per year and is currently producing and selling 25,000 sails per year. The following information relates to current production: $175 Sales price per unit Variable costs per unit: Manufacturing Selling and administrative Total fixed costs: Manufacturing Selling and administrative LEFE $62 $20 $700,000 $250,000 Assume that a special pricing order is accepted for 5600 sails at a sales price of $150 per unit. This special order requires both variable manufacturing and variable selling and administrative costs, as well as incremental fixed costs of $400,000. What will be the impact on operating income? Operating income decreases by $380,800.
Sd