Question: 1 Vaswani Company provides the following information for their first year of operations: Sales, 5,000 units @ $10 each; total production, 7,500 units Selling and administrative costs: Fixed, $1,000; Variable, $1 per unit Production costs per unit: Direct materials, $2; Direct labor, $2; Variable overhead, $1 Fixed manufacturing overhead, $7,500 If Vaswani uses direct costing, how much is the contribution margin? Question: 2 Vintech Manufacturing incurs unit costs of $8 ($5 variable and $3 fixed) in making a subassembly part for its finished product. A supplier offers to make 14,100 of the parts at $6.10 per unit. If the offer is accepted, Vintech will save all variable costs but no fixed costs. Required: Prepare an analysis showing the total cost saving, if any, Vintech will realize by buying the part.
Question: 1 Vaswani Company provides the following information for their first year of operations: Sales, 5,000 units @ $10 each; total production, 7,500 units Selling and administrative costs: Fixed, $1,000; Variable, $1 per unit Production costs per unit: Direct materials, $2; Direct labor, $2; Variable overhead, $1 Fixed manufacturing overhead, $7,500 If Vaswani uses direct costing, how much is the contribution margin? Question: 2 Vintech Manufacturing incurs unit costs of $8 ($5 variable and $3 fixed) in making a subassembly part for its finished product. A supplier offers to make 14,100 of the parts at $6.10 per unit. If the offer is accepted, Vintech will save all variable costs but no fixed costs. Required: Prepare an analysis showing the total cost saving, if any, Vintech will realize by buying the part.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Question: 1
Vaswani Company provides the following information for their first year of operations:
Sales, 5,000 units @ $10 each; total production, 7,500 units
Selling and administrative costs: Fixed, $1,000; Variable, $1 per unit
Production costs per unit: Direct materials, $2; Direct labor, $2; Variable overhead, $1 Fixed
manufacturing overhead, $7,500
If Vaswani uses direct costing, how much is the contribution margin?
Question: 2
Vintech Manufacturing incurs unit costs of $8 ($5 variable and $3 fixed) in making a subassembly
part for its finished product.
A supplier offers to make 14,100 of the parts at $6.10 per unit.
If the offer is accepted, Vintech will save all variable costs but no fixed costs.
Required:
Prepare an analysis showing the total cost saving, if any, Vintech will realize by buying the part.
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