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
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
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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