Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,340 remotes is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total Cost $ 67,210 $ 56,870 $ 31,020 $ 51,700 $ 206,800 Frannie is approached by Lincoln Company, which offers to make the remotes for $18 per unit. Required: 1. Compute the difference in cost per unit between making and buying the remotes if none of the fixed costs can be avoided. What is the change in net income, if Frannie Fans buys the remotes? 2. Compute the difference in cost per unit between making and buying the remotes if $20,680 of the fixed costs can be avoided. What is the change in net income, if Frannie Fans buys the remotes? 3. What is the change in net income if fixed cost of $20,680 can be avoided and Frannie could rent out the factory space no longer in use for $20,680? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the difference in cost per unit between making and buying the remotes if none of the fixed costs can be avoided. What is the change in net income, if Frannie Fans buys the remotes? Difference in cost Change in net income per unit

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,340
remotes is as follows:
Direct materials
Direct labor
Variable overhead
Fixed overhead
Total
Cost
$ 67,210
$ 56,870
$ 31,020
$ 51,700
$ 206,800
Frannie is approached by Lincoln Company, which offers to make the remotes for $18 per unit.
Required:
1. Compute the difference in cost per unit between making and buying the remotes if none of the fixed costs can be avoided. What is
the change in net income, if Frannie Fans buys the remotes?
2. Compute the difference in cost per unit between making and buying the remotes if $20,680 of the fixed costs can be avoided.
What is the change in net income, if Frannie Fans buys the remotes?
3. What is the change in net income if fixed cost of $20,680 can be avoided and Frannie could rent out the factory space no longer in
use for $20,680?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Required 3
Compute the difference in cost per unit between making and buying the remotes if none of the fixed costs can be avoided.
What is the change in net income, if Frannie Fans buys the remotes?
Difference in cost
Change in net income
per unit
Transcribed Image Text:Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,340 remotes is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total Cost $ 67,210 $ 56,870 $ 31,020 $ 51,700 $ 206,800 Frannie is approached by Lincoln Company, which offers to make the remotes for $18 per unit. Required: 1. Compute the difference in cost per unit between making and buying the remotes if none of the fixed costs can be avoided. What is the change in net income, if Frannie Fans buys the remotes? 2. Compute the difference in cost per unit between making and buying the remotes if $20,680 of the fixed costs can be avoided. What is the change in net income, if Frannie Fans buys the remotes? 3. What is the change in net income if fixed cost of $20,680 can be avoided and Frannie could rent out the factory space no longer in use for $20,680? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the difference in cost per unit between making and buying the remotes if none of the fixed costs can be avoided. What is the change in net income, if Frannie Fans buys the remotes? Difference in cost Change in net income per unit
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