o Company has traditionally manufactured a number of different standard machine parts. It is now exploring an outsourcing decision r several of the parts that it currently produces. Cost information for one such machine part is given below: Variable cost/unit Fixed manufacturing costs (total) Allocated corporate overhead Unit product cost (based on 500 units) $ 31.50 5,440.00 6,760.00 $ 55.90 fty percent of the fixed manufacturing costs are directly traceable to this specific machine part and therefore avoidable. An outside upplier will sell the part at a price of $44 per unit if 500 units are purchased. equired: repare an analysis whether We Make should continue to manufacture this machine part or whether it should purchase it from the utside supplier. (Negative amounts should be indicated by a minus sign. Round "Per Unit" to 2 decimal places.) Purchase ariable cost ixed manufacturing overhead Common costs otal costs hould the company make or buy? O Make ○ Buy 500 Units Per Unit Make Buy Difference

o Company has traditionally manufactured a number of different standard machine parts. It is now exploring an outsourcing decision r several of the parts that it currently produces. Cost information for one such machine part is given below: Variable cost/unit Fixed manufacturing costs (total) Allocated corporate overhead Unit product cost (based on 500 units) $ 31.50 5,440.00 6,760.00 $ 55.90 fty percent of the fixed manufacturing costs are directly traceable to this specific machine part and therefore avoidable. An outside upplier will sell the part at a price of $44 per unit if 500 units are purchased. equired: repare an analysis whether We Make should continue to manufacture this machine part or whether it should purchase it from the utside supplier. (Negative amounts should be indicated by a minus sign. Round "Per Unit" to 2 decimal places.) Purchase ariable cost ixed manufacturing overhead Common costs otal costs hould the company make or buy? O Make ○ Buy 500 Units Per Unit Make Buy Difference

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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Collins Co. produces a part used in the manufacture of one of its products. The unit product cost is $40, computed as follows: Direct materials, direct labor, and variable overhead $24 Fixed overhead $16 Total $40 An outside supplier has offered to provide the parts for only $30 each. If the parts are purchased from the outside supplier, (1) the company estimates that 25% of the fixed overhead cost above could be eliminated; (2) the company can use the freed capacity to launch a new product, earning a contribution margin of $5 per unit. Based on these data, the per-unit dollar financial advantage or disadvantage of purchasing from the outside supplier would be: Multiple Choice a)$7 financial disadvantage b)$8 financial advantage c)$2 financial disadvantage d)$3 financial advantage
NSTSYN867 Company has a Components Division which produces parts for product divisions within the company as well as for outside manufacturers. The company's Business Products Division has asked the Components Division to provide it with a new part, A15. Production data related to A15 are as follows: Units needed by Business Products Division Variable production cost Allocated fixed production cost Unfortunately, producing the new part requires the same production team within the Components Division that manufactures another part, X32, for outside customers. Data related to the production and sale of X32 to outside customers are below: Units currently produced & sold 100,000 units Selling price Variable production cost Variable selling cost Allocated fixed production cost 20,000 units $31 per unit $3.50 per unit per unit $70.00 per unit $52.00 per unit $8.00 per unit $2.00 per unit Q. If the NSTSYN867's Components Division must reduce the production of X32 by 18% in order to produce…
Sheffield Corp. incurs the following costs to produce 10500 units of a subcomponent: Direct materials Direct labor Variable overhead Fixed overhead $(3600). $9200 Ⓒ$8150. $950. $(950). 11750 13000 An outside supplier has offered to sell Sheffield the subcomponent for $2.80 a unit. No fixed costs are avoidable. If Sheffield accepts the offer, it could use the production capacity to produce another product that would generate additional income of $3600. The increase (decrease) in net income from accepting the offer would be 20800
The following standard costs pertain to a component part manufactured by Ashby Company:Direct materials$2Direct labour5Manufacturing overhead 20 Standard cost per unit $27The company can purchase the part from an outside supplier for $25 per unit. The manufacturing overhead is 60% fixed and this fixed portion would not be affected by this decision. Assume that direct labour is an avoidable cost in this decision. What is the relevant amount of the standard cost per unit to be considered in a decision of whether to make the part internally or buy it from the external supplier?
Subject: Cost AccountingPlease answer the given questions. Thank you!
Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the parts for its engines, including the carburetors. An outside supplier offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $30 per unit. To evaluate this offer, Troy Engines, Limited, summarized the cost of producing the carburetor internally as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per Unit $ 12 8 2 9* Required 1 Required 2 Required 3 Required 4 12 $43 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. If the company has no alternative use for the facilities being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 12,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted?…
Required information [The following information applies to the questions displayed below.] Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Rims Posts Direct Labor- Hours per unit 0.70 0.80 Annual Production Additional information about the company follows: a. Rims require $14 in direct materials per unit, and Posts require $10. b. The direct labor wage rate is $20 per hour. Activity Cost Pool Machine setups Special processing General factory 26,000 units 90,000 units c. Rims are more complex to manufacture than Posts and they require special equipment. d. The ABC system has the following activity cost pools: Unit product cost of Rims Unit product cost of Posts Activity Measure Number of setups Machine-hours Direct labor-hours Estimated Overhead Cost $ 33,300 $ 172,800 $ 858,000 Estimated Activity Rims 70 3,000 18,200 Posts 230 0 72,000 Total 300 3,000 90,200 2. Determine the unit product cost of each product…
Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the parts for its engines, including the carburetors. An outside supplier offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $30 per unit. To evaluate this offer, Troy Engines, Limited, summarized the cost of producing the carburetor internally as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per 19,000 Units Unit Per Year $ 12 $ 228,000 10 3 190,000 57,000 3* 6 57,000 114,000 $ 34 $ 646,000 "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. If the company has no alternative use for the facilities being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 19,000 carburetors from the outside supplier? 2. Should the outside…
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 131,000 units of each product. Its average cost per unit for each product at this level of activity is given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 35 48 27 35 32 35 $212 Beta $15 23 25 38 28 30 $ 159 The company's traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 8. Assume Cane normally produces and sells 80,000 Betas and 100,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could…