RelyaTech Corporation makes 46,000 tiny wheels to be used in the production of its Beautiful Product. The average cost per tiny wheel at this level of activity is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $10.50 $9.50 $ 3.95 $ 4.90 (ID#13108) An outside manufacturer, called GreatWheel, recently began producing a comparable tiny wheel that could be used in the Beautiful Product. The price offered to RelyaTech Corporation to supply them with this tiny wheel is $26.95 If RelyaTech Corporation decides not to make the wheels, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. Q) What would be the annual financial advantage (disadvantage) for RelyaTech as a result of continuing to make the wheels rather than buying them from the outside supplier?

RelyaTech Corporation makes 46,000 tiny wheels to be used in the production of its Beautiful Product. The average cost per tiny wheel at this level of activity is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $10.50 $9.50 $ 3.95 $ 4.90 (ID#13108) An outside manufacturer, called GreatWheel, recently began producing a comparable tiny wheel that could be used in the Beautiful Product. The price offered to RelyaTech Corporation to supply them with this tiny wheel is $26.95 If RelyaTech Corporation decides not to make the wheels, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. Q) What would be the annual financial advantage (disadvantage) for RelyaTech as a result of continuing to make the wheels rather than buying them from the outside supplier?

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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