Question 6 Amundsen Company makes 60,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Selling Fixed Selling Total $ 10.10 $17.40 $ 2.70 $15.00 $ 2.75 $ 3.25 $51.20 An outside supplier has offered to sell the company all of these parts it needs. If the company accepts this offer, the facilit now being used to make the part would be idle and fixed manufacturing overhead would be reduced by 80% of current c The variable selling costs would be reduced to 40% of current cost. Required: What is the maximum amount the company should be willing to pay an outside supplier per unit for the part?

Question 6 Amundsen Company makes 60,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Selling Fixed Selling Total $ 10.10 $17.40 $ 2.70 $15.00 $ 2.75 $ 3.25 $51.20 An outside supplier has offered to sell the company all of these parts it needs. If the company accepts this offer, the facilit now being used to make the part would be idle and fixed manufacturing overhead would be reduced by 80% of current c The variable selling costs would be reduced to 40% of current cost. Required: What is the maximum amount the company should be willing to pay an outside supplier per unit for the part?

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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Question 10.4 Big Machines Corp. has two divisions. Division Y manufactures components that can be sold in the external market place or transferred to Division Z for further processing. The following data relate to Division Y's component product. Variable manufacturing costs/unit $925 Fixed costs/unit at capacity $275 Selling price/unit $1,800 The capacity of the plant is 2,500 units per year. Division Z has offered to purchase 350 units from Division Y at a price of $1,600/unit, which is the market price of the component. The manager of Division Y has refused this offer stating that it would only return a rate of 25.00%, when the divisional target return on sales is 28.00%. The Division Y manager also states that additional fixed costs of $195,000 would be required to produce the 350 units. The corporate required rate of return is 18% of assets and the existing asset base in Division Y is $2,500,000. Required: How many units must Division Y sell in order…
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Chapter 7 Problem Solution 1 Please select the correct answer and solve and explain. "Goodstone Tire Corp sells tires for $90 each. Per unit costs associated with producing and selling the tires are: Direct Materials $35 Direct Labor $10 Factory Overhead $20 The variable portion of the factory overhead is $8 per unit. A foreign company wants to purchase 1,000 tires for $65 each. Assuming Goodstone has excess capacity: 1) The incremental profit from special order will be $12,000 2) The incremental loss from the special order will be $25,000 3) The will be no incremental loss or profit from the special order
Question 6 Technology Inc. Ltd sells desktop computer printers for $65 per unit. Unit product costs are: Direct materials $12 Direct labor 20 Manufacturing overhead 6 Total $38 A special order to purchase 10,000 desktop computer printers has recently been received from another company, and Technology Inc. has the idle capacity to fill the order. The company will incur an additional $1.50 per printer for additional labor costs due to a slight modification the buyer wants to be made to the original product. One-third of the manufacturing overhead costs are fixed and will be incurred no matter how many units are produced. $2,100 of existing fixed administrative costs will be allocated to the order as “part of the cost of doing business”.…
LL Requlred Information The following information applies to the questions displayed below] Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product Its average cost per unit for each product at this level of activity are given below. Alpha $42 Beta $ 24 32 24 Direct materials Direct labor Variable manufacturing overhead Traceable Fixed manufacturing overhead Variable selling expenses Common fixed expenses 42. 26. 34 31. 34. 27. Total cost per unit $173 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 2 What is the company's total amount of common fixed expenses? Total common fixed expenses. ( Prev of 15 2 3 4 Next e to search TPL F4 F5
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Question 2 Capstone Company has two divisions. The Bottle Division produces products that have variable costs of $3 per unit. It has annual production of 200,000 units. 160,000 units of the products are sold to outsiders at $5 per unit and 40,000 units to the Mixing Division. The fixed costs of the Bottle Division are $125,000 per year. There was no beginning or ending inventories during the year. Mixing sells its finished products to outside customers for $11.50 per unit. Mixing has variable costs of $2.50 per unit in addition to the costs from the Bottle Division. The annual fixed costs of Mixing were $85,000. There was no beginning or ending inventories during the year. Required: a) How much should be the minimum transfer price: (i) if market for the products from Bottle Division is perfectly competitive? (ii) if intermediate market exists that is not perfectly competitive, and the Bottle Division has no unused capacity?
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