Exercise 13-11 (Algo) Make or Buy Decision [LO13-3]Han Products manufactures 31,000 units of part S-6 each year for use on its production line. At this level of activity,the cost per unit for part S-6 Is:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadTotal cost per part$ 3.508.002.506.00$ 20.00An outside supplier has offered to sell 31,000 units of part S-6 each year to Han Products for $18 per part. If HanProducts accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another companyat an annual rental of $81,000. However, Han Products has determined that two-thirds of the fixed manufacturingoverhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier.Required:What is the financial advantage (disadvantage) of accepting the outside supplier's offer?

Question:Han Products manufactures 31,000 units of part S-6 each year for use on its production…

Answered: Exercise 13-11 (Algo) Make or Buy…

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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Relevant Range and Fixed and Variable Costs Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 100,800 to 165,600 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Components produced 100,800 128,800 165,600 Total costs: Total variable costs . . . . . . . . . $41,328 (d) (j) Total fixed costs . . . . . . . . . . . . 46,368 (e) (k) Total costs . . . . . . . . . . . . . . . . . $87,696 (f) (l) Cost per unit: Variable cost per unit . . . . . . . (a) (g) (m) Fixed cost per unit . . . . . . . . . . (b) (h) (n) Total cost per unit . . . . . . . . . . (c) (i) (o) Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar. Cost Report Components produced 100,800 128,800 165,600 Total costs: Total variable costs…
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6. Plumbing Company makes 4,000 units per year of a part called an axial tap for use in one of its products. Data concerning the unit production costs of the axial tap follow: Direct materials Direct labor £35 10 8 20 Variable manufacturing overhead ... Fixed manufacturing overhead Total manufacturing cost per unit... £73 An outside supplier has offered to sell Plumbing Company all of the axial taps it requires. If Plumbing Company decided to discontinue making the axial taps, 40% of the above fixed manufacturing overhead costs could be avoided. Assume that direct labor is a variable cost. Required: a. Assume Plumbing Company has no alternative use for the facilities presently devoted to production of the axial taps. If the outside supplier offers to sell the axial taps for £65 each, should Plumbing Company accept the offer? Fully support your answer with appropriate calculations. b. Assume that Plumbing Company could use the facilities presently devoted to production of the axial taps…
Relevant Range and Fixed and Variable Costs Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 100,800 to 158,400 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Components produced 100,800 123,200 158,400 Total costs: Total variable costs . . . . . . . . . $40,320 (d) (j) Total fixed costs . . . . . . . . . . . . 44,352 (e) (k) Total costs . . . . . . . . . . . . . . . . . $84,672 (f) (l) Cost per unit: Variable cost per unit . . . . . . . (a) (g) (m) Fixed cost per unit . . . . . . . . . . (b) (h) (n) Total cost per unit . . . . . . . . . . (c) (i) (o) Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar. Cost Report Components produced 100,800 123,200 158,400 Total costs: Total variable costs $40,320 (d)…
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not graded Sell or Process FurtherJensen Manufacturing Company makes a partially completed assembly unit that it sells for $44 per unit. Normally, 38,000 units are sold each year. Variable unit cost data on the assembly are as follows: Direct material $10 Direct labor 8 Variable manufacturing overhead 4 The company is now using only 70% of its normal capacity; it could fully use its normal capacity by processing the assembly further and selling it for $51 per unit. If the company does this, material and labor costs will each increase by $2 per unit and variable overhead will go up by $1 per unit. Fixed costs will increase from the current level of $160,000 to $225,000. Prepare an analysis showing whether Jensen should process the assemblies further.Use a negative sign with answer to only indicate a loss from processing assemblies further; otherwise do not use negative signs with your answers. Sell of Process Further Differential Analysis Differential revenue…
Relevant Range and Fixed and Variable Costs Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 61,600 to 100,800 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Components produced 61,600 79,200 100,800 Total costs: Total variable costs . . . . . . . . . $19,712 (d) (j) Total fixed costs . . . . . . . . . . . . 22,176 (e) (k) Total costs . . . . . . . . . . . . . . . . . $41,888 (f) (l) Cost per unit: Variable cost per unit . . . . . . . (a) (g) (m) Fixed cost per unit . . . . . . . . . . (b) (h) (n) Total cost per unit . . . . . . . . . . (c) (i) (o) Complete the cost schedule below. When computing the cost per unit, round to two decimal places. Round all other values to the nearest dollar. Cost Report Components produced 61,600 79,200 100,800 Total costs: Total variable costs $19,712 (d)…
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