art, a division of Indiana Enterprises, currently makes 110,000 units of a product that has created a number of manufacturing problems. Elkhar
Q: Lakeside Inc. produces a product that currently sells for $82.80 per unit. Current production costs…
A: Given, Direct labor is $25 Variable overhead cost is $11.50 Both direct labor and variable overhead…
Q: Spartac Corp has two divisions: Yekaterinburg Division and Sochi Division. The Yekaterinburg…
A: Transfer Pricing is the price at which one division or a manufacturing unit transfers its products…
Q: Futura Company purchases the 71,000 starters that it installs in its standard line of farm tractors…
A: Buy cost is the cost to purchase the product from outside. Make cost is the cost of making/…
Q: Materials used by Square Yard Products Inc. in producing Division 3's product are currently…
A: The income is increased with Increase in revenue. The contribution Margin is calculated as…
Q: Futura Company purchases 69,000 starters from a supplier at $12.40 per unit that it installs in farm…
A: The "make or buy" concept in cost management involves deciding whether to produce a product or…
Q: Liu Incorporated is considering whether to continue to make a component or to buy it from an outside…
A: Lets understand the basics.Management needs to make decision between the make or buy decision…
Q: Futura Company purchases 63,000 starters from a supplier at $12.00 per unit that it installs in farm…
A: A make-or-buy decision refers to the act of using cost-benefit to decide whether to buy a product or…
Q: Swan Company has two divisions, Hill and Paradise. Hil 5,600 units from an outside supplier for $62.…
A: Solution: Paradise will save = Outside purchase price - Transfer price = 62 - 48 = $14 per unit
Q: The cost to Swank Company of manufacturing 15,000 units of a particular part is $135,000, of which…
A: Step 1: a)Step 2:Step 3:b) The company should continue to manufacture the part since cost of…
Q: Materials used by Square Yard Products Inc. in producing Division 3's product are currently…
A:
Q: Alpha currently makes a subassembly for its main product. The costs per unit are as follows: Direct…
A: Relevant costs are the cost that can be affected by the decision. When a company decides to buy or…
Q: Scottsdale Manufacturing is organized into two divisions: Fabrication and Assembly. Components…
A: Transfer pricing indicates to the prices of goods and services that are interchange between…
Q: XYZ Corp. currently produces a part but is looking to reduce costs. Units 20,000 Per…
A: The make or buy decisions are made by analysing the relevant cost of buying it from outside.…
Q: Scottsdale Manufacturing is organized into two divisions: Fabrication and Assembly. Components…
A: 2. Fabrication Division cannot accept a price lower than its 580 selling price to the external…
Q: [The following information applies to the questions displayed below.] Burchard Company sold 42,000…
A: The contribution margin is calculated as the difference between sales revenue and total variable…
Q: [The following information applies to the questions displayed below.] Burchard Company sold 42,000…
A: Contribution margin takes into consideration only variable expenses. It is the difference between…
Q: Division A, which is operating at capacity, produces a component that currently sells in a…
A: TRANSFER PRICING Transfer price is the price for goods and services, at which these are transferred…
Q: Miller Company's total sales are $150,000. The company's direct labor cost is $18,000, which…
A: Variable cost is the cost which varies with production while fixed cost remains same and does not…
Q: Futura Company purchases the 74,000 starters that it installs in its standard line of farm tractors…
A: The "make or buy" concept in cost management involves deciding whether to produce a product or…
Q: The Sheridan Company is a multidivisional company. Its managers have full responsibility for profits…
A: The objective of the question is to determine whether Division A should transfer goods to Division B…
Q: -irect materials -irect labor ariable manufacturing overhead ixed manufacturing overhead $9.50 $8.50…
A: Solution : Financial advantage or disadvantage from making is based on the difference of relevant…
Q: The Sunland Company is a multidivisional company. Its managers have full responsibility for profits…
A: Transfer price is used for the internal transfer of intermediary products between different…
Q: Futura Company purchases the 62,000 starters that it installs in its standard line of farm tractors…
A: A make-or-buy decision is a useful business decision-making process for an organization, which is…
Q: The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division.…
A: The transfer price is the price at which the units are transferred from one department to another in…
Q: Futura Company purchases the 66.000 starters that it installs in its standard line of farm tractors…
A: The differential analysis is performed to compare the different alternatives available with the…
Q: Materials used by the Instrument Division of XPort Industries are currently purchased from outside…
A: Income from operations means the amount of money earned by an entity from its day to day operations.…
Q: a. If a transfer price of $148 per unit is established and 50,000 units of materials are…
A: Operations income:- Operations income/Operating income is that income that a business gets after…
Q: Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys…
A: Relevant Costs are the equal to the marginal cost of production, i.e. the additional expenditure…
Q: Adams Company has two divisions, A and B. Division A manufactures 6,100 units of product per month.…
A: Variable cost means the cost which vary with the level of output where as fixed cost remain fixed…
Q: Futura Company purchases 78,000 starters from a supplier at $11.40 per unit that it installs in farm…
A: The "make or buy" concept in cost management involves deciding whether to produce a product or…
Q: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside…
A: Transfer pricing is a costing method used within an organization to transfer material between two…
Q: Lola Metals has two decentralized divisions, Stamping and Finishing. Finishing always has purchased…
A: Profit is the amount of money earned by an entity after deducting the expenses from the revenues. It…
Q: Solomon Company has two divisions, A and B. Division A manufactures 6,600 units of product per…
A: Approach to solving the question: I have provided an explanation and reasoning for the values used…
Q: The materials used by the South Division of Eagle Company are currently purchased from outside…
A: North Division’s operating income per unit on internal transfer = Transfer price - Variable cost =…
Q: Futura Company purchases 66,000 starters from a supplier at $9.80 per unit that it installs in farm…
A: The differential analysis is performed to compare the different alternatives available such as…
Q: Vaughn Manufacturing incurs the following costs to produce 10,400 units of a subcomponent: Cost…
A: Solution Production- Direct material 8736 Direct labor 11752 Variable overhead 13104…
Q: The Heating Division of Oriole International produces a heating element that it sells to its…
A: Transfer price means the price charged by one department from other department of the same company…
Q: Cotton Corp. currently makes 12,500 subcomponents a year in one of its factories. The unit costs to…
A: Formulas:
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Melbourne Corporation has traditionally made a subcomponent of its major product. Annual production of 30,000 subcomponents results in the following costs: Direct materials $ 250,000 Direct labor $ 200,000 Variable manufacturing overhead $ 190,000 Fixed manufacturing overhead $ 120,000 Melbourne has received an offer from an outside supplier who is willing to provide the 30,000 units of the subcomponent each year at a price of $28 per unit. There would be no effect of this decision on the total fixed manufacturing overhead of the company. Melbourne knows that the facilities now being used to manufacture the subcomponent could be rented to another company for revenue of $80,000 per year if the subcomponent were purchased from the outside supplier. The financial advantage (disadvantage) of making the subcomponent would be: Multiple Choice $0 $280,000 $120,000 $200,000Delta produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $ 90,000 Direct labor 130,000 Variable factory overhead Fixed factory overhead 140,000 Total costs $420,000 60,000 Of the fixed factory overhead costs, $60,000 is avoidable. 20) Conners has offered to sell 10,000 units of the same part to Delta for $36 per unit. Assuming there is no other use for the facilities, what is the effect on operating income if Delta buys from Conners? 21) Assuming no other use of their facilities, at what buying price per unit for Delta would Delta's operating income be the same whether they made the part or bought it from Conners?A company makes 36,000 motors to be used in the production of its blender. The average cost per motor at this level of activity is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead An outside supplier recently began producing a comparable motor that could be used in the blender. The price offered to the company for this motor is $23.95. There would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. The annual financial advantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be: Multiple Choice O O O ($68,400) $214,200 $9.50 $ 8.50 $ 3.45 $ 4.40 90,000 $158,400
- Futura Company purchases the 66,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $10.50 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $11.40 as shown below: Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost Per Unit $ 4.00 3.50 1.90 1.10 0.50 0.40 $11.40 Total $ 125,400 $ 72,600 $ 26,400 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $125,400) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $88,000 per period.…Lakeside Incorporated produces a product that currently sells for $46.80 per unit. Current production costs per unit include direct materials, $13; direct labor, $15; varlable overhead, $6.50; and fixed overhead, $6.50. Product engineering has determined that a certain part of the product conversion process could be outsourced. Raw material costs would not be affected, but direct labor and variable overhead costs would be reduced by 30%. No other opportunity is currently feasible for unused production capacity. Required: a. What would be the net cost advantage or disadvantage if Lakeview decided to outsource part of the conversion process at a cost of $5.20 per unit? Note: Do not round your Intermediate calculations. Round your final answer to 2 decimal places. b. Should Lakeside outsource part of the conversion process at a cost of $5.20 per unit? a. b. Should Lakeside outsource conversion process at this cost?Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys the Part GX from McMillan Company for $79 instead of making it, Edidas will not use the released facilities in another manufacturing activity. Twenty percent of the fixed overhead will continue irrespective of CEO Donald Mickey's decision. The cost per unit data are as follows: Cost to make the part Direct Materials Direct Labor (S) 30 15 Variable Overhead 20 Fixed Overhead 20 85 Required : 1. Explain which alternative is more attractive to Edidas, make or buy Part GX. 2. Assume there is new information that Edidas is negotiating to purchase cheaper raw materials from supplier (Twenty percent lower price). Is this information relevant or irrelevant? On the basis of financial considerations alone, should Edidas make or buy Part GX? Show your calculations 3. Based on requirement 2, what are relevant qualitative factors that Edidas should consider to decide whether to make or buy Part GX?…
- Barrington Box Enterprises has two divisions, large and small, that share the common costs of the company's communications network. The annual common costs are $4,800,000. You have been provided with the following information for the upcoming year: Large Small Calls 150,000 90,000 The cost accountant determined $2,760,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is the total communication network costs allocated to the Large Box Division, assuming the company uses dual-rates to allocate common costs? Multiple Choice $2,760,000 $2,259,000 $2,541,000 Time on Network (hours) 160,000 240,000 $1,640,000Grey Inc. has been purchasing a component, Z for $85 a unit. The company is currently operating at 75% of full capacity, and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Z, determined by absorption costing method, is estimated as follows: Direct materials $30 Direct labor 15 Variable factory overhead 26 Fixed factory overhead 10 Total $81 Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Z. Grey Inc. Proposal to Manufacture Part Z March 12, 20XX Purchase price of Part Z Differential cost to manufacture Z: Direct materials X Direct labor X Variable factory overhead X Cost savings from manufacturing Part ZHawkins Audio Video, Inc. manufactures digital cameras. Hawkins is considering whether it should outsource production of a part used in the manufacturing of its cameras. 60,000 units of the part were made by Hawkins last year. At this production level, the company incurred the following direct product costs: Direct Materials $250,000 Direct Labor $104,000 Manufacturing Overhead incurred during the same period for production of the part is represented by the following cost behavior equation: y = $0.10x + $50,000. If the part were purchased from an outside supplier, 80% of the total fixed manufacturing overhead cost would continue, and the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional income from this other product would be $12,600 per year. A supplier has been identified who can sell the part to Hawkins at a price of $7.80 per unit. Which of…
- Futura Company purchases the 71,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $13.00 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $14.20 as shown below: Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost Per Unit Total $ 7.00 3.00 B 1.90 $ 134,900 1.40 $ 99,400 0.50 0.40 $ 28,400 $14.20 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $134,900) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $82,000 per period.…Futura Company purchases 75,000 starters from a supplier at $11.10 per unit that it installs in farm tractors. Due to a reduction in output, the company now has enough idle capacity to produce the starters rather than buying them from the supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $12.20, as shown below: Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost Per Unit $ 5.00 3.00 1.80 1.46 2.66 2.40 $ 12. 26 Total $ 135,000 $ 185,000 $ 30,000 If Futura decides to make the starters, a supervisor would be hired (at a salary of $135,000) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $83.000 per period. Required: What is the financial advantage (disadvantage) of making the…
