Make or Buy, Qualitative Considerations Hetrick Dentistry Services operates in a large metropolitan area. Currently, Hetrick has its own dental laboratory to produce porcelain and gold crowns. The unit costs to produce the crowns are as follows: Porcelain Gold Raw materials $ 70 $130 Direct labor 27 27 Variable overhead 8. Fixed overhead 22 22 Total $127 $187 Fixed overhead is detailed as follows: Salary (supervisor) $26,000 Depreciation 5,000 Rent (lab facility) 32,000 Overhead is applied on the basis of direct labor hours. These rates were computed by using 5,500 direct labor hours. A local dental laboratory has offered to supply Hetrick all the crowns it needs. Its price is $125 for porcelain crowns and $150 for gold crowns; however, the offer is conditional on supplying both types of crowns-it will not supply just one type for the price indicated. If the offer is accepted, the equipment used by Hetrick's laboratory would be scrapped (it is old and has no market value), and the lab facility would be closed. Hetrick uses 2,000 porcelain crowns and 600 gold crowns per year.

Make or Buy, Qualitative Considerations Hetrick Dentistry Services operates in a large metropolitan area. Currently, Hetrick has its own dental laboratory to produce porcelain and gold crowns. The unit costs to produce the crowns are as follows: Porcelain Gold Raw materials $ 70 $130 Direct labor 27 27 Variable overhead 8. Fixed overhead 22 22 Total $127 $187 Fixed overhead is detailed as follows: Salary (supervisor) $26,000 Depreciation 5,000 Rent (lab facility) 32,000 Overhead is applied on the basis of direct labor hours. These rates were computed by using 5,500 direct labor hours. A local dental laboratory has offered to supply Hetrick all the crowns it needs. Its price is $125 for porcelain crowns and $150 for gold crowns; however, the offer is conditional on supplying both types of crowns-it will not supply just one type for the price indicated. If the offer is accepted, the equipment used by Hetrick's laboratory would be scrapped (it is old and has no market value), and the lab facility would be closed. Hetrick uses 2,000 porcelain crowns and 600 gold crowns per year.

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Description: Make or Buy, Qualitative ConsiderationsHetrick Dentistry Services operates in a large metropolitan area. Currently, Hetrick has its own dental laboratory to produce porcelain and gold crowns.The unit costs to produce the crowns are as follows:Porcel

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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