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

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 18E: A company is considering a special order for 1,000 units to be priced at 8.90 (the normal price...

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