Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,280 remotes is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total Cost $ 66,820 $56,540 $ 30,840 $51,400 $ 205,600 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 $20,560 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 $20,560 can be avoided and Frannie could rent out the factory space no longer in use for $20,560? 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
Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,280 remotes is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total Cost $ 66,820 $56,540 $ 30,840 $51,400 $ 205,600 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 $20,560 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 $20,560 can be avoided and Frannie could rent out the factory space no longer in use for $20,560? 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,280
remotes is as follows:
Direct materials
Direct labor
Variable overhead
Fixed overhead
Total
Cost
$ 66,820
$56,540
$ 30,840
$ 51,400
$ 205,600
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 $20,560 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 $20,560 can be avoided and Frannie could rent out the factory space no longer in
use for $20,560?
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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