Required: 1. Prepare an analysis showing whether Gl would be better off making or buying the balls at a projected volume of 80,000 packs (320,000 golf balls). (Round "Per Unit" answers to 2 decimal places.) 80,000 packs Per Unit Make 38Buy Difference Purchase Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Common costs allocated to this product line Total costs

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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sub question 1 and 2

Required:
1. Prepare an analysis showing whether GI would be better off making or buying the balls at a projected volume of 80,000 packs
(320,000 golf balls). (Round "Per Unit" answers to 2 decimal places.)
80,000 packs
Per Unit
Make
Buy
Difference
Purchase
Direct materials
Direct labour
Variable manufacturing overhead
Fixed manufacturing overhead
Common costs allocated to this product line
Total costs
2-a. At what volume would GI be indifferent between making and buying? (Do not round intermediate calculations and round your
Final answer to nearest whole number.)
Indifferent point
packs
Transcribed Image Text:Required: 1. Prepare an analysis showing whether GI would be better off making or buying the balls at a projected volume of 80,000 packs (320,000 golf balls). (Round "Per Unit" answers to 2 decimal places.) 80,000 packs Per Unit Make Buy Difference Purchase Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Common costs allocated to this product line Total costs 2-a. At what volume would GI be indifferent between making and buying? (Do not round intermediate calculations and round your Final answer to nearest whole number.) Indifferent point packs
Golfers, Inc. (GI) manufactures golf-related equipment including golf balls. This year's expected production of golf balls is 80,000 packs
(each consisting of four golf balls). Cost data are as follows:
80,000
Packs
Per Pack
Product costs directly traceable to balls:
Direct materials
Direct labour
Variable manufacturing overhead
Fixed manufacturing overhead
General allocated overhead
$2.30 $184,000
96,000
20,000
40,800
21,600
1. 20
0.25
$362,400
The full cost of one pack of golf balls is $4.53. GI has received an offer from an outside supplier to supply any desired quantity of balls
at a price of $5.45 per pack of four golf balls. The cost accounting department has provided the following information:
a. The direct fixed manufacturing overhead is the cost of leasing the machine that stamps out the balls. The machine can produce a
maximum of 500,000 balls per year. If the balls are bought, the machine will no longer be needed.
b. No other costs will be affected.
Transcribed Image Text:Golfers, Inc. (GI) manufactures golf-related equipment including golf balls. This year's expected production of golf balls is 80,000 packs (each consisting of four golf balls). Cost data are as follows: 80,000 Packs Per Pack Product costs directly traceable to balls: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead General allocated overhead $2.30 $184,000 96,000 20,000 40,800 21,600 1. 20 0.25 $362,400 The full cost of one pack of golf balls is $4.53. GI has received an offer from an outside supplier to supply any desired quantity of balls at a price of $5.45 per pack of four golf balls. The cost accounting department has provided the following information: a. The direct fixed manufacturing overhead is the cost of leasing the machine that stamps out the balls. The machine can produce a maximum of 500,000 balls per year. If the balls are bought, the machine will no longer be needed. b. No other costs will be affected.
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