One-half of the traceable fixed manufacturing overhead relates to supervisory salaries and the remainder relates to depreciation of equipment with nosalvage value. If the company chooses to buy this component part from a supplier, then the supervisor who oversees its production would bedischarged. What is the financial advantage (disadvantage) of buying 10,000 units from the supplier?Multiple Choice$(40,000)$42.500$(42,500)$85,000 Assume a company is considering buying 10,000 units of a component part rather than making them. A supplier has agreed to sell the company 10,000units for a price of $41.25 per unit. The company's accounting system reports the following costs of making the part:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overhead, traceableFixed manufacturing overhead, allocatedTotal costPer Unit$1912284$4510,000 Unitsper Year.$190,000120,00020,00080,00040,000$450,000One-half of the traceable fixed manufacturing overhead relates to supervisory salaries and the remainder relates to depreciation of equipment with nosalvage value. If the company chooses to buy this component part from a supplier, then the supervisor who oversees its production would bedischarged. What is the financial advantage (disadvantage) of buying 10,000 units from the supplier?

The differential analysis is performed to compare the different alternatives available with the…

Answered: Assume a company is considering buying…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following standard costs pertain to a component part manufactured by Ashby Company:Direct materials$2Direct labour5Manufacturing overhead 20 Standard cost per unit $27The company can purchase the part from an outside supplier for $25 per unit. The manufacturing overhead is 60% fixed and this fixed portion would not be affected by this decision. Assume that direct labour is an avoidable cost in this decision. What is the relevant amount of the standard cost per unit to be considered in a decision of whether to make the part internally or buy it from the external supplier?
Hansaben
Subject: Cost AccountingPlease answer the given questions. Thank you!
Each year, Basu Company produces 24,000 units of a component used in microwave ovens. An outside supplier has offered to supply the part for $1.17. The unit cost is: Direct materials $0.72 Direct labor 0.25 Variable overhead 0.13 Fixed overhead 2.95 Total unit cost $4.05 Required: 1. What are the alternatives for Basu Company? 2. Assume that none of the fixed cost is avoidable. List the relevant cost(s) of internal production. List the relevant cost(s) of external purchase. 3. Which alternative is more cost effective and by how much? _____ by $___ 4. What if $18,560 of fixed overhead is rental of equipment used only in production of the component that can be avoided if the component is purchased? Which alternative is more cost effective and by how much? ____ by $____
A company is setting its direct materials and direct labor standards for its leading product. Direct materials cost from the supplier are $9 per square foot, net of purchase discount. Freight-in amounts to $0.40 per square foot. Basic wages of the assembly line personnel are $14 per hour. Payroll taxes are approximately 21% of wages. Benefits amount to $2 per hour. How much is the direct materials cost standard per square foot? OA. $16.00 OB. $9.40 OC. $9.00 OD. $25.00
Werner Company produces and sells disposable foil baking pans to retailers for $2.65 per pan. The variable cost per pan is as follows: Direct materials Direct labor Variable factory overhead Variable selling expense Fixed manufacturing cost totals $143,704 per year. Administrative cost (all fixed) totals $19,596. Required: $0.27 0.51 0.69 0.18 Compute the number of pans that must be sold for Werner to break even. pans Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost? Round your answers to the nearest cent. Unit variable cost Unit variable manufacturing cost Which is used in cost-volume-profit analysis? Unit variable cost ✓ How many pans must be sold for Werner to earn operating income of $7,000? pans How much sales revenue must Werner have to earn operating income of $7,000?
Gadubhai
You make widgets, which is a subassembly for you main product of whatsup. An outside vendor has provided you with a quote to supply the widget part for $ 72.00 per unit Your cost records show the following: Your projected production for the widget is 12,500 units Item of Cost Per Unit Cost Direct Material $18.75 Direct Labor $38.00 Variable manufacturing overhead $9.25 Lease on manufacturing facility $36,000.00 per year Depreciation of equipment $2.50 Allocated Corporate Expenses $1.25 If this offer is accepted, you can sublease the manufacturing facility for $15,000 per year All direct and variable costs can be avoided. The equipment has no salvage value How much would net operating income be changed if the outside supplier offer was accepted? Show all calculations for full credit
Subject: acounting
Division X of Bella Corporation sells Part A to other companies for $87.20 per unit. According to the company's accounting system, the costs to Division X to make a unit of Part A are: O $87.20 per unit O $62.60 per unit O $58.10 per unit O $79.95 per unit O None of the above Direct materials Direct labor $5.80 Variable Division Y of Bella Corporation uses a part much like Part A in one of its products. Division Y can buy this part from an outside supplier for $79.95 per unit. However, Division Y could use Part A instead of the part it purchases from the outside supplier. What is the most Division Y would be willing to pay the Division X for Part A? Question 21 $42.70 manufacturing $9.60 overhead Fixed manufacturing $4.50 overhead
Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $13 each. Zion uses 4,400 units of Component K2 each year. The cost per unit of this component is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total $7.84 2.84 1.67 4.00 $16.35 The fixed overhead is an allocated expense; none of it would be eliminated if production of Component K2 stopped. Required: 1. What are the alternatives facing Zion Manufacturing with respect to production of Component K2? 2. List the relevant costs for each alternative. If required, round your answers to the nearest cent. Total Relevant Cost Make per unit Buy per unit Differential Cost to Make per unit
Kesterson Corporation has provided the following information: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Sales commissions Multiple Choice ( $15.15 Variable administrative expense Fixed selling and administrative expense The incremental manufacturing cost that the company will incur if it increases production from 10,000 to 10,001 units is closest to: $16.45 Cost per Unit $6.70 $ 3.30 $ 1.65 $13.95 $ 1.20 $ 0.80 Cost per Period $ 23,000 $ 5,000 Hel

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