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Golfers, Inc. (GI) manufac (each consisting of four golf balls). Cost data are as follows: 80,000 Packs Per Pack Product costs directly traceable to balls: Direct materials Direct labour $2.30 $184,000 96,000 20,000 40,800 1.20 Variable manufacturing overhead Fixed manufacturing overhead General alllocated overhead 0. 25 21,600 $362,400 any desired quantity of balls

Golfers, Inc. (GI) manufac (each consisting of four golf balls). Cost data are as follows: 80,000 Packs Per Pack Product costs directly traceable to balls: Direct materials Direct labour $2.30 $184,000 96,000 20,000 40,800 1.20 Variable manufacturing overhead Fixed manufacturing overhead General alllocated overhead 0. 25 21,600 $362,400 any desired quantity of balls

FINANCIAL ACCOUNTING
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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sub question 2a and b 

Golfers, Inc. (GI) manufactures golf-related equipment including golf balls. This year's expected production of golf balls is 80,000 packs (each consisting of four golf balls). Cost data are as follows: 80,000 Packs Per Pack Product costs directly traceable to balls: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead General allocated overhead $2.30 $184,000 96,000 20,000 40,800 21,600 1. 20 0.25 $362,400 The full cost of one pack of golf balls is $4.53. GI has received an offer from an outside supplier to supply any desired quantity of balls at a price of $5.45 per pack of four golf balls. The cost accounting department has provided the following information: a. The direct fixed manufacturing overhead is the cost of leasing the machine that stamps out the balls. The machine can produce a maximum of 500,000 balls per year. If the balls are bought, the machine will no longer be needed. b. No other costs will be affected.
Transcribed Image Text:Golfers, Inc. (GI) manufactures golf-related equipment including golf balls. This year's expected production of golf balls is 80,000 packs (each consisting of four golf balls). Cost data are as follows: 80,000 Packs Per Pack Product costs directly traceable to balls: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead General allocated overhead $2.30 $184,000 96,000 20,000 40,800 21,600 1. 20 0.25 $362,400 The full cost of one pack of golf balls is $4.53. GI has received an offer from an outside supplier to supply any desired quantity of balls at a price of $5.45 per pack of four golf balls. The cost accounting department has provided the following information: a. The direct fixed manufacturing overhead is the cost of leasing the machine that stamps out the balls. The machine can produce a maximum of 500,000 balls per year. If the balls are bought, the machine will no longer be needed. b. No other costs will be affected.
2-a. At what volume would GI be indifferent between making and buying? (Do not round intermediate cealculations and round your final answer to nearest whole number.) nt polnt packs 2-b. What does the indifference point indicate? (Do not round intermediate calculations and round your final answers to nearest whole number.) t will cost more to if the quantity exceeds packs It will cost more to if the quantity is below packs
Transcribed Image Text:2-a. At what volume would GI be indifferent between making and buying? (Do not round intermediate cealculations and round your final answer to nearest whole number.) nt polnt packs 2-b. What does the indifference point indicate? (Do not round intermediate calculations and round your final answers to nearest whole number.) t will cost more to if the quantity exceeds packs It will cost more to if the quantity is below packs
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