Reuben's Dell currently makes rolls for dell sandwiches it produces. It uses 33,000 rolls annually in the production of dell sandwiches. The costs to make the rolls are:Materials$0.24 per roll0.39 per roll0.16 per roll0.20 per rollLaborVariable overheadFixed overheadA potential supplier has offered to sell Reuben the rolls for $0.89 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effectReuben would see a sIn profit if he buys the rolls.profit be?

The incremental analysis is performed to compare the different alternatives available with the…

Answered: Reuben's Dell currently makes rolls for…

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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Rutro Corp. makes 59,000 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 material $21.00 Direct labor 23.00 Variable manufacturing overhead 8.00 Fixed manufacturing overhead 30.00Unit product cost $82.00 An outside supplier has offered to sell the company all of the 59,000 parts it needs for $75.00 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of another product that is in high demand. The additional contribution margin on this other product would be $310,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, 64% of the fixed manufacturing overhead cost being applied to the part would continue even if the part were…
Scott Corporation produces a part that is used in the production of one of its products. The per-unit costs associated with the annual production of 5,000 units of this part are as follows: Direct materials $ 2.00 Direct labor $ 3.00 Variable factory overhead $ 2.00 Fixed factory overhead $ 8.00 Total costs $15.00 Smith Company has offered to sell 5,000 units of the same part to Scott Corporation for $8 per unit. If Scott buys them from Smith Company, $2 fixed factory overhead cost per unit can be saved. In this condition, Scott should: Group of answer choices Make the part, thereby saving $40,000 annually. Make the part, thereby saving $1.50 per unit. Buy the part, there by saving $1.00 per unit Buy the part, there by saving $1.00 per unit
Waterways packages some of its products into sets for home installations. One set (small) sells for $77 with variable costs of production for the set at $50. Another set (large) sells for $149 with variable costs of $99. The parts for the $77 set take 9 machine hours to produce. The parts for the $149 set take 20 machine hours to produce.Given the information above, and assuming all of the package sets produced can be sold each month, illustrate the best use of machine hours. (Round answers to 2 decimal places, e.g. 5.25.) Small Set Large Set Contribution margin per unit of limited resource $ $
Rumba Dance Hall has offered to buy from Muy Bueno Bakery 100 of their chocolate cakes for $25 each. No variable selling costs would need to be paid, but special packaging of $100 will have to be added. Normally, Muy Bueno sells its cakes at $35 each. Its costs per cake are materials, $12; direct labor, $5; variable factory overhead, $3; fixed factory overhead, $2; and variable selling costs, $4. How much net differential income or loss will Muy Bueno make if it accepts this offer?
Reuben's Deli currently makes rolls for deli sandwiches it produces. It uses 37,867 rolls annually in the production of deli sandwiches. The costs to make the rolls are: Reuben's Deli cost data Costs Amounts Increments Materials $0.36 per roll Labor 0.52 per roll Variable overhead 0.17 per roll Fixed overhead 0.37 per roll A potential supplier has offered to sell Reuben the rolls for $0.83 each. If the rolls are purchased, 30% of the fixed overhead could be avoided. If Reuben accepts the offer, what will the effect on profit be? Do not round until the final calculation - then round to the nearest penny, two decimal places. If the effect is negative, use a dash - not parentheses ( ).
The Arthur Company manufactures kitchen utensils. The company is currently producing well below its full capacity. The Benton Company has approached Arthur with an offer to buy 17,000 utensils at $0.85 each. Arthur sells its utensils wholesale for $0.96 each; the average cost per unit is $0.91, of which $0.10 is fixed costs. If Arthur were to accept Benton's offer, what would be the increase in Arthur's operating profits? Multiple Choice O O $850. $1,020. $680. $1,870.
The Mighty Music Company produces and sells a desktop speaker for $200. The company has the capacity to produce 60,000 speakers each period. At capacity, the costs assigned to each unit are as follows: Unit-level costs Product-level costs Facility-level costs The company has received a special order for 11,000 speakers. If this order is accepted, the company will have to spend $20,000 on additional costs. Assuming that no sales to regular customers will be lost if the order is accepted, at what selling price will the company be indifferent between accepting and rejecting the special order? Multiple Choice O O $96.82 $146.82 $104.32 $95 $25 $15 $107.32
Cypress Inc. manufactures wooden canoes. Cypress normally sells the canoes for $2,700 per unit. A major distributor has offered to buy 1,000 units at a reduced price. At its budgeted annual production level of 18,000 units, Cypress' per-unit manufacturing costs are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $950 $200 $330 $450 Cypress would have to produce the special order on an overtime shift, which would increase the direct labor costs to $300 per unit. The special order would not impact Cypress' fixed costs. However, if Cypress accepts the special order, it will also incur $60,000 in additional, one-time costs in connection with the order. What is the minimum per-unit selling price that Cypress must charge to break even on the special order? Round to the nearest whole dollar and do not enter a dollar sign or a decimal point (e.g., enter 89, not $89.00).
Zena Technology sells arc computer printers for $60 per unit. Unit product costs are: Zena Technology cost data Costs Direct materials Direct labor Manufacturing overhead Amounts $12 22 4 A special order to purchase 14,519 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $4 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price per unit that Zena should accept for this special order? Round to the nearest penny, two decimal places.
Carondelet Coffee has begun making and selling pastries. The fixed costs of making the pastry are $4,000, and the company estimates that the variable costs are $.75 per pastry. How many pastries does Carondelet have to sell to earn net income of $5,000 if it sells each pastry for $3 apiece?
Adams Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials $ 5,400 Unit-level labor 6,400 Unit-level overhead 3,900 Product-level costs* 10,500 Allocated facility-level costs 28,200 *One-third of these costs can be avoided by purchasing the containers.Russo Container Company has offered to sell comparable containers to Adams for $2.80 each.Required Calculate the total relevant cost. Should Adams continue to make the containers? Adams could lease the space it currently uses in the manufacturing process. If leasing would produce $12,500 per month, calculate the total avoidable costs. Should Adams continue to make the containers?
Beto Company pays $6.50 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering making the part. Making the part would cost $7.20 per unit for direct materials and $1.00 per unit for direct labor. The company normally applies overhead at the predetermined rate of 200% of direct labor cost. Incremental overhead to make the part would be 80% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Beto make or buy the part? (a) Make or Buy Analysis Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should Make Buy

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