Pizana Computer Company has been purchasing carrying cases for its portable con to production at the rate of 44% of direct labor cost. The unit costs to produce com Direct materials $30.00 Direct labor 17.00 Factory overhead (44% of direct labor) 7.48 Total cost per unit 154.40 Pzana Computer Company manufactures the carrying cases, fixed factory overt a. Prepare a offerential analysis dated May 31 to determine whether the compan zero, enter "0" Differential Analysis
Pizana Computer Company has been purchasing carrying cases for its portable con to production at the rate of 44% of direct labor cost. The unit costs to produce com Direct materials $30.00 Direct labor 17.00 Factory overhead (44% of direct labor) 7.48 Total cost per unit 154.40 Pzana Computer Company manufactures the carrying cases, fixed factory overt a. Prepare a offerential analysis dated May 31 to determine whether the compan zero, enter "0" Differential Analysis
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
hh.
Subject :- Accounting
Transcribed Image Text:Make-or-Buy Decision
Pizena Computer Company has been purchesing carrying cases for its portable computers at a purchase price of $50 per unit. The company, which is currently operating below full capacity, charges factory overhead
to production at the rate of 44% of direct isbor cost. The unit costs to produce comparable carrying cases are expected to be as follows
Direct materials
$30.00
17.00
Direct labor
Factory overhead (44% of direct labor)
7.48
$54.40
Total cost per unit
If Pizans Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the director
costs
a. Prepare a differential analysis dated May 31 to determine whether the company should make (Alternative 1) or buy (Acternative 2) the carrying case. Round your answers to two decimal places it an amount
is 2010, enter "0"
Line Item Description
Unit costs
Differential Analysis
Make (Alt. 1) or Buy (Alt. 2) Carrying Case
May 31
Purchase price
Direct materials
Direct laber
Variable factory overhead
Fixed factory overhead
Total unit costs
Make Carrying Case Buy Carrying Case
(Alternative 1) (Alternative 2)
Differential Effects
(Alternative 2)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education