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Required m. Determine the avoidable cost per unit of making the bike frames, assuming that Rundle is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Rundle outsource the bike frames? ». Assuming that Rundle is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment.

Required m. Determine the avoidable cost per unit of making the bike frames, assuming that Rundle is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Rundle outsource the bike frames? ». Assuming that Rundle is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment.

FINANCIAL ACCOUNTING
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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Check my work Rundle Bike Company makes the frames used to build its bicycles. During 2018, Rundle made 23,000 frames; the costs incurred follow: Unit-level materials costs (23,000 units x $50) Unit-level labor costs (23,000 units * $52) Unit-level overhead costs (23,000 $9) Depreciation on manufacturing equipment Bike frame production supervisor's salary. Inventory holding costs Allocated portion of facility-level costs Total costs $1,150,000 1,196,000 207,000 98,000 76,900 330,000 460,000 $3,517,900 Rundle has an opportunity to purchase frames for $116 bach. Additional Information 1. The manufacturing equipment, which originally cost $560,000, has a book value of $430,000, a remaining useful life of eight years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $67,000 per year. 2. Rundle has the opportunity to purchase for $990,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value of $68,800. This equipment will increase productivity substantially, reducing unit-level labor costs by 70 percent. Assume that Rundle will continue to produce and sell 23,000 frames per year in the future. 3. If Rundle outsources the frames, the company can eliminate 70 percent of the inventory holding costs. Required a. Determine the avoidable cost per unit of making the bike frames, assuming that Rundle is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data. should Rundle outsource the bike frames? . Assuming that Rundle is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment.
Transcribed Image Text:Check my work Rundle Bike Company makes the frames used to build its bicycles. During 2018, Rundle made 23,000 frames; the costs incurred follow: Unit-level materials costs (23,000 units x $50) Unit-level labor costs (23,000 units * $52) Unit-level overhead costs (23,000 $9) Depreciation on manufacturing equipment Bike frame production supervisor's salary. Inventory holding costs Allocated portion of facility-level costs Total costs $1,150,000 1,196,000 207,000 98,000 76,900 330,000 460,000 $3,517,900 Rundle has an opportunity to purchase frames for $116 bach. Additional Information 1. The manufacturing equipment, which originally cost $560,000, has a book value of $430,000, a remaining useful life of eight years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $67,000 per year. 2. Rundle has the opportunity to purchase for $990,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value of $68,800. This equipment will increase productivity substantially, reducing unit-level labor costs by 70 percent. Assume that Rundle will continue to produce and sell 23,000 frames per year in the future. 3. If Rundle outsources the frames, the company can eliminate 70 percent of the inventory holding costs. Required a. Determine the avoidable cost per unit of making the bike frames, assuming that Rundle is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data. should Rundle outsource the bike frames? . Assuming that Rundle is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment.
.............. Required A Required B Required C Determine the avoidable cost per unit of making the bike frames, assuming that Rundle is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Rundle outsource the bike frames? (Round your answer to 2 decimal places.) voidable cost per unit for making the product tundle should outsource the bike frames? per unit Yes Show Transcribed Text Required A Required B Assuming that Rundle is considering whether to either purchase the new equipment or outsource the calculate. (Do not round intermediate calculations.) Required C Should Rundle purchase new equipment or outsource? Profit must increase by Show Transcribed Text Purchase
Transcribed Image Text:.............. Required A Required B Required C Determine the avoidable cost per unit of making the bike frames, assuming that Rundle is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Rundle outsource the bike frames? (Round your answer to 2 decimal places.) voidable cost per unit for making the product tundle should outsource the bike frames? per unit Yes Show Transcribed Text Required A Required B Assuming that Rundle is considering whether to either purchase the new equipment or outsource the calculate. (Do not round intermediate calculations.) Required C Should Rundle purchase new equipment or outsource? Profit must increase by Show Transcribed Text Purchase
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