Penagos Corporation is presently making part Z43 that is used in one of its products. A total of 5,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment. Allocated general overhead An outside supplier has offered to produce and sell the part to the company for $20.80 each. If this offer is accepted, the supervisor's salary and all of the variable. costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $4,000 of these allocated general overhead costs would be avoided. If management decides to buy part Z43 from the outside supplier rather than to continue making the part, what would be the annual financial advantage (disadvantage)? Multiple Choice ($34,500) ($30,500) ($15,500) Prev Per Unit $ 1.10 $ 3.10 $ 6.90 $ 5.80 $5.20 $ 5.60 8 of 9 www ‒‒‒ www Next >

Penagos Corporation is presently making part Z43 that is used in one of its products. A total of 5,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment. Allocated general overhead An outside supplier has offered to produce and sell the part to the company for $20.80 each. If this offer is accepted, the supervisor's salary and all of the variable. costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $4,000 of these allocated general overhead costs would be avoided. If management decides to buy part Z43 from the outside supplier rather than to continue making the part, what would be the annual financial advantage (disadvantage)? Multiple Choice ($34,500) ($30,500) ($15,500) Prev Per Unit $ 1.10 $ 3.10 $ 6.90 $ 5.80 $5.20 $ 5.60 8 of 9 www ‒‒‒ www Next >

Name: Penagos Corporation is presently making part Z43 that is used in one
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Description: Penagos Corporation is presently making part Z43 that is used in one of itsproducts. A total of 5,000 units of this part are produced and used every year. Thecompany's Accounting Department reports the following costs of producing thepart at this le

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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Concept explainers

Process Costing

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure. 

Job Costing

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.

ABC Costing

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.

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Question

Penagos Corporation is presently making part Z43 that is used in one of its
products. A total of 5,000 units of this part are produced and used every year. The
company's Accounting Department reports the following costs of producing the
part at this level of activity:
Direct materials.
Direct labor
Variable overhead
Supervisor's salary
Depreciation of special equipment
Allocated general overhead
An outside supplier has offered to produce and sell the part to the company for
$20.80 each. If this offer is accepted, the supervisor's salary and all of the variable
costs, including direct labor, can be avoided. The special equipment used to make
the part was purchased many years ago and has no salvage value or other use.
The allocated general overhead represents fixed costs of the entire company. If
the outside supplier's offer were accepted, only $4,000 of these allocated general
overhead costs would be avoided.
If management decides to buy part Z43 from the outside supplier rather than to
continue making the part, what would be the annual financial advantage
(disadvantage)?
Multiple Choice
($34,500)
($30,500)
($15,500)
< Prev
Per Unit
$ 1.10
$ 3.10
$6.90
$ 5.80
$5.20
$ 5.60
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