CFG Company produces 2,000 units of a necessary component with the following costs: Cost Component Amount Direct Materials $48,000 Direct Labor $22,000 Variable Overhead $12,000 Fixed Overhead $14,000 CFG Company could avoid $8,000 in fixed overhead costs if it acquires the components externally. If cost minimization is a major consideration and the company would prefer to buy the components, what is the maximum external price that CFG Company would accept to acquire the 2,000 units externally?

CFG Company produces 2,000 units of a necessary component with the following costs: Cost Component Amount Direct Materials $48,000 Direct Labor $22,000 Variable Overhead $12,000 Fixed Overhead $14,000 CFG Company could avoid $8,000 in fixed overhead costs if it acquires the components externally. If cost minimization is a major consideration and the company would prefer to buy the components, what is the maximum external price that CFG Company would accept to acquire the 2,000 units externally?

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of 1,350 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of 900 per unit. a. If a transfer price of 1,000 per unit is established and 75,000 units of materials are transferred, with no reduction in the Components Divisions current sales, how much would Ziegler Inc.s total operating income increase? b. How much would the Instrument Divisions operating income increase? c. How much would the Components Divisions operating income increase?
Red Company produces 1,000 units of a necessary component with the following costs: Direct Materials $34,000 Direct Labor 15,000 Variable Overhead 8,000 Fixed Overhead 10,000 Red's Company could avoid $6,000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Red Company would accept to acquire the 1,000 units externally? Select one: a. $59,000 b. $63,000 c. $61,000 d. $57,000
Ouzts Corporation is considering Alternative A and Alternative B. Costs associated with the alternatives are listed below: Alternative Alternative A В Materials costs $41,000 $37,900 $13,300 $15,300 $57,100 $37,900 $13,300 $22,500 Processing costs Equipment rental Occupancy costs What is the financial advantage (disadvantage) of Alternative B over Alternative A?
Nelly Technology manufactures a particular computer component. Currently, the costs per unit are asfollows:Direct material P 50Direct labor 500Variable overhead 250Fixed overhead 400Fur Inc. has obtained Nelly with a offer to sell 10,000 units of the component for P1,100 per unit. IfNelly accepts the proposal, P2,500,000 of the fixed overhead will be eliminated. Should Nelly makeor buy the component?
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Ouzts Corporation is considering Altemnative A and Alternative B. Costs associated with the alternatives are listed below: Alternative Alternative Materials costs Processing costs Equipment rental Occupancy costs $ 42,000 $ 38,600 $ 13,400 $ 15,100 $ 56,200 $ 38,600 $ 13,400 $ 22,600 What is the financial advantage (disadvantage) of Alternative B over Alternative A? Multiple Cholce $109100 $21.700) $130.800 其其 69°F Mostly pe here to search DELL
Two alternatives, code-named X and Y, are under consideration at Guyer Corporation. Costs associated with the alternatives are listed below. Alternative X Alternative Y $ 52,000 Materials costs Processing costs $ 75,800 $ 57,100 $ 57,100 Equipment rental $ 21,200 $ 21,200 Occupancy costs $ 20,400 $ 30,000 What is the financial advantage (disadvantage) of Alternative Y over Alternative X? Multiple Choice O O O $(33,400) $(167,400) $184,100 $150,700
ABC company manufactures a particular computer component. Currently, the cost per unit is as follows: Direct Materials;P50, Direct Labor,P500; Variable Overhead,P250; Fixed Overhead,P400XYZ company has obtained with an offer to sell 10,000 units of the component for P1,100 per unit. If ABC accepts the proposal, P2,500,000 of the fixed overhead will be eliminated. Should ABC make or buy the component? Select the correct response: Make due to savings of P3,000,000 Buy due to savings of P1,000,000 Buy due to savings of P2,500,000 Make due to savings of P500,000
Swifty produces 1,000 units of necessary components with the following costs: Direct material - $30,000 Direct Labor - $19,000 Variable Overhead - $3,000 Fixed Overhead - $7,000. The Fixed Overhead costs cannot be reduced, but another product could be made that would increase profit contribution to $8,000 if the components were acquired externally. If cost maximization is a major consideration and the company would prefer to buy the components, what is the maximum external price that Swifty would be willing to accept for the 1,000 units externally?
Two alternatives, code-named X and Y, are under consideration at Guyer Corporation. Costs associated with the alternatives are listed below. Alternative Alternative Y Materials costs Processing costs Equipment rental Occupancy costs $ 49,000 $ 53,800 $ 20,200 $ 19,200 $ 71,000 $ 53,800 $ 20,200 $ 28,600 What is the financial advantage (disadvantage) of Alternative Y over Alternative X? Multiple Cholce S(157.900) $142.200 S173.600 S31.400) 68°F Mostly cloudy ype here to search DELL
What are the fixed overhead costs of making the component?