Need help Eagle Golf makes 1000 sets of golf clubs a quarter. They make all of the clubs including a putter. Howeverthey are thinking about purchasing the putters from OnePutt.The following information about Eagle Golf's manufacturing costs are below:Direct materials $5Direct labout $9Variable OH $3Fixed OH $9.50 per unitThey have the option to purchase putters from OnePutt for $25 each. If they purchase putters, the will stillneed 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) Allocate each of these cost or revenue descriptors into the relevant or not relevant categoryRELEVANTNOT RELEVANTWe spent $10,000 on amachine 3 years agoRevenue in option 1 is$5, and in option 2 is$6Fixed costs are $2000regardlessMaterials for option 1 is$2.50, and for option 2is $2.50If we didn't spend$1,000 on a machineupgrade, we could buymore advertising

Answered: Eagle Golf makes 1000 sets of golf…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Need help

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)

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

Expert Solution

Step 1: Introduction to product cost

“Since you have posted multiple questions, we will provide the solution only to the first question as per our Q&A guidelines. Please repost the remaining questions separately.”

The entire sum of money spent on making or purchasing a thing is referred to as the product's cost. It covers all expense, both direct and indirect, related to the product's purchase or manufacturing.Direct costs are those that can be easily linked to a particular product and are directly related to its manufacturing. The price of labor, raw materials, and production overhead are a few examples of direct costs.