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 $ 31 Direct labor 107 Variable overhead 18 Fixed overhead 45 Total $ 201 Trailblazers has offered to sell the assembly to Mobility for $166 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 $39,450. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Statu Select "none" if there is no effect.) as base. Status Quo Alternative Difference Trailblazers' offer Materials Labor Variable overhead Fixed overhead applied Total costs 2$ 0 S
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 $ 31 Direct labor 107 Variable overhead 18 Fixed overhead 45 Total $ 201 Trailblazers has offered to sell the assembly to Mobility for $166 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 $39,450. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Statu Select "none" if there is no effect.) as base. Status Quo Alternative Difference Trailblazers' offer Materials Labor Variable overhead Fixed overhead applied Total costs 2$ 0 S
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text: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
$ 31
Direct labor
107
Variable overhead
18
Fixed overhead
45
Total
$201
Trailblazers has offered to sell the assembly to Mobility for $166 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 $39 450.
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.)
Status Quo
Alternative
Difference
Trailblazers' offer
Materials
Labor
Variable overhead
Fixed overhead applied
Total costs
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