es Coram Audio makes wireless headphones. Each pair of headphones comes with a travel case. Since its founding, Coram has manufactured its own travel cases. Recently, Holmur Travel Gear (HTG), a local outfitter that manufactures and sells backpacks, tent cases, and so on, contacted Coram and proposed that they produce the headphone travel cases. Based on management experience, Coram's cost per travel case is as follows (based on annual production of 40,800 units). Ac Sraw Hill AC Direct materials Direct labor Variable overhead Fixed overhead Total HTG has offered to sell the case to Coram for $39 each. The total order would amount to 40,800 travel cases per year. Coram's management decides that they will make the switch to HTG cases if Coram can save at least $12,400 per year. Accepting the offer would eliminate annual fixed overhead of $77,520. $ 10.00 21.20 6.40 4.70 $ 42.30 Required: a. Prepare a schedule that shows the total differential costs. b. Should Coram continue to make the travel cases or buy them from HTG? Complete this question by entering your answers in the tabs below. 13.532 Required A Required B Should Coram continue to make the travel cases or buy them from HTG? Should Coram continue to make the travel cases or buy them from HTG? Buy < Prev 7 of 12 Next >
es Coram Audio makes wireless headphones. Each pair of headphones comes with a travel case. Since its founding, Coram has manufactured its own travel cases. Recently, Holmur Travel Gear (HTG), a local outfitter that manufactures and sells backpacks, tent cases, and so on, contacted Coram and proposed that they produce the headphone travel cases. Based on management experience, Coram's cost per travel case is as follows (based on annual production of 40,800 units). Ac Sraw Hill AC Direct materials Direct labor Variable overhead Fixed overhead Total HTG has offered to sell the case to Coram for $39 each. The total order would amount to 40,800 travel cases per year. Coram's management decides that they will make the switch to HTG cases if Coram can save at least $12,400 per year. Accepting the offer would eliminate annual fixed overhead of $77,520. $ 10.00 21.20 6.40 4.70 $ 42.30 Required: a. Prepare a schedule that shows the total differential costs. b. Should Coram continue to make the travel cases or buy them from HTG? Complete this question by entering your answers in the tabs below. 13.532 Required A Required B Should Coram continue to make the travel cases or buy them from HTG? Should Coram continue to make the travel cases or buy them from HTG? Buy < Prev 7 of 12 Next >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:es
Mc
Braw
Hill
***
!
Coram Audio makes wireless headphones. Each pair of headphones comes with a travel case. Since its founding, Coram has
manufactured its own travel cases. Recently, Holmur Travel Gear (HTG), a local outfitter that manufactures and sells backpacks, tent
cases, and so on, contacted Coram and proposed that they produce the headphone travel cases. Based on management experience,
Coram's cost per travel case is as follows (based on annual production of 40,800 units).
Q
1
N
Direct materials
Direct labor
Variable overhead
Fixed overhead
Total
HTG has offered to sell the case to Coram for $39 each. The total order would amount to 40,800 travel cases per year. Coram's
management decides that they will make the switch to HTG cases if Coram can save at least $12,400 per year. Accepting the offer
would eliminate annual fixed overhead of $77,520.
Required:
a. Prepare a schedule that shows the total differential costs.
b. Should Coram continue to make the travel cases or buy them from HTG?
Complete this question by entering your answers in the tabs below.
Required A Required B
Should Coram continue to make the travel cases or buy them from HTG?
Should Coram continue to make the travel cases or buy them from HTG?
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