Blake Enterprises can produce a component of its product that incurs the following costs per unit: • Direct materials: $12.00 • Direct labor: $18.00 • Variable overhead: $5.00 • Fixed overhead: $10.00 An outside supplier has offered to sell the product to Blake Enterprises for $40.00 per unit. Compute the net incremental cost or savings of buying the component. (a) $5.00 cost per unit (b) $10.00 savings per unit (c) $8.00 cost per unit (d) $10.00 cost per unit

Blake Enterprises can produce a component of its product that incurs the following costs per unit: • Direct materials: $12.00 • Direct labor: $18.00 • Variable overhead: $5.00 • Fixed overhead: $10.00 An outside supplier has offered to sell the product to Blake Enterprises for $40.00 per unit. Compute the net incremental cost or savings of buying the component. (a) $5.00 cost per unit (b) $10.00 savings per unit (c) $8.00 cost per unit (d) $10.00 cost per unit

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 3CE: Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins...

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Wheeler Company can produce a product that incurs the following costs per unit: direct materials, $10.50; direct labor, $24.50, and incremental overhead, $9.30. An outside supplier has offered to sell the product to Wheeler for $47.60. Compute the net incremental cost or savings of buying.
Wheeler Company can produce a product that incurs the following costs per unit: direct materials, $9.10; direct labor, $23.10, and overhead, $15.10. An outside supplier has offered to sell the product to Wheeler for $42.56. If Wheeler buys from the supplier, it will still incur 40% of its overhead cost. Compute the net incremental cost or savings of buying. Multiple Choice $3.75 savings per unit. $1.30 cost per unit. $1.30 savings per unit. $3.75 cost per unit. $4.32 cost per unit.
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Yes Co. has the option to either further process product Y to produce Product Z. The selling price of product Y is $30 per unit and it costs $28 to produce each unit of product Y. Product Z would be sold for $55 and would require an additional $31 cost for production. What is the differential cost to produce product Z? a. $3 per unit b. $28 per unit c. $31 per unit d. $25 per unit
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Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 per switch. Vista 's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 230,000 switches per year and what is the total cost of that alternative?
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $1.45 per switch. Vista’s CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 108,900 $ 145,000 Variable cost per switch 0.46 0.20 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 150,000 switches per year and what is the total cost of that alternative?
Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20.70 per pound and costs $16.80 per pound to produce. Product D would sell for $43.20 per pound and would require an additional cost of $10.40 per pound to produce. What is the differential cost of producing Product D? Oa. $12.48 per pound Ob. $6.24 per pound Oc. $8.32 per pound Od. $10.40 per pound
Curiumber Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range or output as follows. Output in Units 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Rent Cost 11.000 $5,290 5,290 8,464 8,464 8,464 8,464. 8,464 8.464 10.580 10,000 10,580 10.580 Direct Materials $4,200 7,200 7,200 9,600. 12,000 14,400 16.800 19,200 30.999 37,030 46.552
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