Gent Designs requires three units of part A for every unit of A1 that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4,000 units were produced: Direct materials $4.00 Direct labor 1.40 Manufacturing overhead 1.20 Total $6.60 Variable manufacturing overhead is applied at $1.00 per unit. The other $0.20 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next year's production. Cory Corporation has offered to supply 6,000 units of part A at a price of $6.80 per unit. If Gent accepts the offer, all of the variable costs and $800 of the fixed costs will be avoided. A. Calculate the differential cost? Cost to buy $ Cost to make Differential cost B. Should Gent Designs accept the offer from Cory

Gent Designs requires three units of part A for every unit of A1 that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4,000 units were produced: Direct materials $4.00 Direct labor 1.40 Manufacturing overhead 1.20 Total $6.60 Variable manufacturing overhead is applied at $1.00 per unit. The other $0.20 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next year's production. Cory Corporation has offered to supply 6,000 units of part A at a price of $6.80 per unit. If Gent accepts the offer, all of the variable costs and $800 of the fixed costs will be avoided. A. Calculate the differential cost? Cost to buy $ Cost to make Differential cost B. Should Gent Designs accept the offer from Cory

Name: Gent Designs requires three units of part A for every unit ofA1 that
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Description: Gent Designs requires three units of part A for every unit ofA1 that it produces. Currently, part A is made by Gent, withthese per-unit costs in a month when 4,000 units wereproduced:Direct materials$4.00Direct labor1.40Manufacturing overhead1.20Tot

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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Gent Designs requires three units of part A for every unit of A1 that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4,200 units were produced: Direct materials $4.00 Direct labor 1.50 Manufacturing overhead 1.30 Total $6.80 Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 5,900 units of part A for the next year’s production. Cory Corporation has offered to supply 5,900 units of part A at a price of $7.00 per unit. If Gent accepts the offer, all of the variable costs and $1,260 of the fixed costs will be avoided. A. Calculate the differential cost? Cost to buy $_____ Cost to make _____ Differential cost $_____ B. Should Gent Designs accept the offer from Cory Corporation? Gent Designs ______
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