Crane Music produces 59000 blank CDs on which to record music. The CDs have the following costs: Direct Materials $10000 Direct Labour 14000 Variable Overhead 2500 Fixed Overhead 6500 None of Crane’s fixed overhead costs can be reduced, but another product could be made that would increase the operating income by $3500 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Crane would be willing to accept to acquire the 59000 units externally? $33000 $30000 $29500 $36500

Crane Music produces 59000 blank CDs on which to record music. The CDs have the following costs: Direct Materials $10000 Direct Labour 14000 Variable Overhead 2500 Fixed Overhead 6500 None of Crane’s fixed overhead costs can be reduced, but another product could be made that would increase the operating income by $3500 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Crane would be willing to accept to acquire the 59000 units externally? $33000 $30000 $29500 $36500

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...

See similar textbooks

Similar questions

Vaughn Music produces 60800 blank CDs on which to record music. The CDs have the following costs Direct Materials $10600 Direct Labour 14800 Variable Overhead 2800 Fixed Overhead 6800 None of Vaughni's foxed overhead costs can be reduced, but another product could be made that would increase the operating income by $4400 if the CDs were acquired externally If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Vaughn would be willing to accept to acquire the 60800 units externally
Concord Music produces 59600 blank CDs on which to record music. The CDs have the following costs: Direct Materials $10000 Direct Labour 15700 Variable Overhead 3300 Fixed Overhead 6600 None of Concord’s fixed overhead costs can be reduced, but another product could be made that would increase the operating income by $4500 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Concord would be willing to accept to acquire the 59600 units externally? $31100 $40100 $35600 $33500
Waterway Music produces 59300 blank CDs on which to record music. The CDs have the following costs: Direct Materials $11000 Direct Labour 14200 Variable Overhead 2900 Fixed Overhead 7500 Waterway could avoid $3900 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the 59300 units externally, what is the maximum external price that Waterway would expect to pay for the units? $35600 $31700 $32000 $28100
Flounder Tech produces 60000 iPhone adapters with the following costs: Direct Materials $13000 Direct Labor 11000 Variable Overhead 3000 Fixed Overhead 12000 None of Flounder's fixed overhead costs can be reduced, but another product could be made that would increase profit by $6900 if the adapters were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the adapters, what is the maximum external price that Flounder would be willing to accept to acquire the 60000 units externally? O $33900 $32100 O $45900 ○ $39000
Concord Corporation manufactures widgets. Bowden Company has approached Concord with a proposal to sell the company widgets at a price of $88000 for 100000 units. The following costs are associated with Concord's production process when 100000 units are produced: Direct material Direct labor Manufacturing overhead Total $ 33000 29500 48500 $111000 Manufacturing overhead of $12150 of costs will be eliminated if the components are no longer produced by Concord. What is the incremental cost or savings to Concord if the widgets are bought instead of made? $23000 incremental savings $13350 incremental cost $10850 incremental savings $23000 incremental cost
Blue Spruce Tech produces 60,000 iPhone adapters with the following costs:
Jims Company produces 60,000 type-C earphones with the following costs: Direct Materials P13,000 Direct Labor 15,000 Variable Overhead 3,000 Fixed Overhead 7,000 None of Jims fixed overhead costs can be reduced, but another product could be made that would increase profit by P4,000 if the earphones were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the earphones, what is the maximum external price that Jims would be willing to accept to acquire the 60,000 units externally?
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?
Relevant and irrelevant costs. Answer the following questions. Robinson Computers makes 5,700 units of a circuit board, CB76, at a cost of $230 each. Variable cost per unit is $180 and fixed cost per unit is $50. Peach Electronics offers to supply 5,700 units of CB76 for $210. If Robinson buys from Peach, it will be able to save $20 per unit in fixed costs but continue to incur the remaining $30 per unit. Should Robinson accept Peach’s offer? Explain. RT Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information:
Eyescape Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Eyescape Systems the switch for $14.50 per unit. None of Eyescape's fixed costs are avoidable. 1(Click the icon to view the outsourcing decision.) Eyescape Systems needs 78,000 optical switches. By outsourcing them, Eyescape Systems can use its idle facilities to manufacture another product that will contribute $224,000 to operating income. Read the requirements2. Requirement 1. Identify the expected net costs that Eyescape Systems will incur to acquire 78,000 switches under three alternative plans. Outsource switches Facilities Make new Switch costs Make Idle product Variable costs: Direct materials Direct labor Variable manufacturing overhead Purchase cost Expected profit contribution from the other product…
Value Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 32,000 parts is $90,000, which includes fixed costs of $30,000 and variable costs of $60,000. The company can buy this part from an external supplier for $5 per unit and avoid 10% of the fixed costs. If Value Electronics decides to outsource the production of the part, how will it impact its operating income? A. Operating income increases by $97,000. B. Operating income decreases by $100,000. C. Operating income decreases by $97,000. D. Operating income increases by $100,000.
Yasmine co. Can further process process product B to produce Product C. Product B is currently selling for $30 per pound and costs $28 per pound to produce. Product C would sell for $55 per pound and require an additional cost of $31 per pound to produce. What is the differential cost of producing product C?