Answered: Determine whether it is best for you to…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6EA: Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in...

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The Svenson corporation manufactures cell phones. It manufactures its own circuit boards for cell phones, an important part for the cell phone.
The unit variable cost of raw materials is $180
The variable unit labor cost is $65.
The unit variable cost of indirect costs is $13
Fixed costs are $6,000
The number of parts it manufactures is 700 cell phones in a month.
Morly, an electrical parts supplier, offers to sell you the board for $210 plus freight of $8 per unit.
• Determine whether it is best for you to continue manufacturing the part or purchase it from the supplier.
• Calculate the profit or loss you would have if you accepted the supplier's proposal.

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