Need help with a practice question from the last unit Recher Corporation uses part Q89 In one of Its products. The company's Accounting Department reports the following costs ofproducing the 9,800 units of the part that are needed every year.PerUnit$ 9.00$ 5.00$ 9.90$ 3.80Direct materialsDirect laborVariable overheadSupervisor's salaryDepreciation of special equipmentAllocated general overhead$3.20$ 1.70An outside supplier has offered to make the part and sell It to the company for $30.00 each. If this offer Is accepted, the supervisor'ssalary and all of the varlable costs, Including direct labor, can be avolded. The speclal equlpment used to make the part waspurchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entirecompany. If the outside supplier's offer were accepted, only $2,900 of these allocated general overhead costs would be avolded. Inadditlon, the space used to produce part Q89 could be used to make more of one of the company's other products, generating anaddltlonal segment margin of $18,000 per year for that product.Required:a. What Is the financlal advantage (disadvantage) of accepting the outside suppller's offer?Financial advantage (disadvantage) isb. Should the company make or buy Q89?the part.The company should

Formula: Total cost = Direct materials + direct labor + variable overhead + supervisor salary Sum…

Recher Corporation uses part Q89 In one of Its products. The company's Accounting Department reports the followlng costs of producing the 9,800 units of the part that are needed every year. Per Unit Direct materials $ 9.00 $ 5.00 $ 9.90 $ 3.80 $ 3.20 $ 1.70 Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead An outside supplier has offered to make the part and sell it to the company for $30.00 each. If this offer Is accepted, the supervisor's salary and all of the varlable costs, Including direct labor, can be avolded. The speclal 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 entl company. If the outside supplier's offer were accepted, only $2,900 of these allocated general overhead costs would be avoided. In addition, the space used to produce part Q89 could be used to make more of one of the company's other products, generating an additional segment margin of $18,000 per year for that product. Requlred: a. What Is the financlal advantage (disadvantage) of accepting the outslide suppller's offer? Financial advantage (disadvantage) is b. Should the company make or buy Q89? The company should the part.

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 1CE: The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:...