Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units): Direct materials Direct labor Variable overhead Fixed overhead Total Trailblazers' offer Materials $28 Labor 110 19 Trailblazers has offered to sell the assembly to Mobility for $164 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $35,550. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) 38 $195 Variable overhead Fixed overhead applied Total costs Status Quo $0 Alternative Difference $0 higher lower lower lower lower lower

Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units): Direct materials Direct labor Variable overhead Fixed overhead Total Trailblazers' offer Materials $28 Labor 110 19 Trailblazers has offered to sell the assembly to Mobility for $164 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $35,550. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) 38 $195 Variable overhead Fixed overhead applied Total costs Status Quo $0 Alternative Difference $0 higher lower lower lower lower lower

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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Cost Accounting; Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly , its cost per rear wheel assembly is as follows (based on annual production of 2000 units); Direct materials-$28, Dirct labor-55, Variable overhead-23, Fixed overhead-43 Total=$149 Trailblazers has offered to sell the assembly to Mobility for $110 each. The total order would amount to 2,000 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazer's offer would eliminate annual fixed overhead of $40,600. Required; a. Prepare a schedule that shows the total differential cost
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