Eagle Golf makes 1000 sets of golf clubs a quarter. They make all of the clubs including a putter. However they are thinking about purchasing the putters from OnePutt. The following information about Eagle Golf's manufacturing costs are below: Direct materials $5 Direct labout $9 Variable OH $3 Fixed OH $9.50 per unit They have the option to purchase putters from OnePutt for $25 each. If they purchase putters, the will still need to spend the fixed cost of $9.50 per unit ($9500 in total). The total cost to make the product is $ The total cost to buy the product is $ The relevant cost to make the product is $ (to 2 decimal places)
Eagle Golf makes 1000 sets of golf clubs a quarter. They make all of the clubs including a putter. However they are thinking about purchasing the putters from OnePutt. The following information about Eagle Golf's manufacturing costs are below: Direct materials $5 Direct labout $9 Variable OH $3 Fixed OH $9.50 per unit They have the option to purchase putters from OnePutt for $25 each. If they purchase putters, the will still need to spend the fixed cost of $9.50 per unit ($9500 in total). The total cost to make the product is $ The total cost to buy the product is $ The relevant cost to make the product is $ (to 2 decimal places)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Eagle Golf makes 1000 sets of golf clubs a quarter. They make all of the clubs including a putter. However
they are thinking about purchasing the putters from OnePutt.
The following information about Eagle Golf's manufacturing costs are below:
Direct materials $5
Direct labout $9
Variable OH $3
Fixed OH $9.50 per unit
They have the option to purchase putters from OnePutt for $25 each. If they purchase putters, the will still
need to spend the fixed cost of $9.50 per unit ($9500 in total).
The total cost to make the product is $
The total cost to buy the product is $
The relevant cost to make the product is $
(to 2 decimal places)
Transcribed Image Text:Allocate each of these cost or revenue descriptors into the relevant or not relevant category
RELEVANT
NOT RELEVANT
We spent $10,000 on a
machine 3 years ago
Revenue in option 1 is
$5, and in option 2 is
$6
Fixed costs are $2000
regardless
Materials for option 1 is
$2.50, and for option 2
is $2.50
If we didn't spend
$1,000 on a machine
upgrade, we could buy
more advertising
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