Scrooge McDuck Safe Limited is considering buying the hinges it uses in themanufacture of vaults from an outside vendor. Currently, Scrooge McDuck SafeLimited makes the hinges in its own manufacturing facility. Scrooge McDuckSafe Limited can buy the hinges for $1.50 each. The company uses 900,000hinges each year. Fixed cost for Scrooge McDuck Safe Limited would notchange if the company stopped making the hinges. Information about ScroogeMcDuck Safe Limited's cost to manufacture the 900,000 casters follows:Per Unit$.50.10TotalDirect material$450,00090,000360,000225.000$1,125,000Direct laborVariable overheadFixed overheadTotal.4025$1.25Required:A. Prepare a relevant cost schedule that indicates whether Scrooge McDuckSafe Limited should buy the hinges or continue to make them.B. If Scrooge purchased the hinges, management has approached you that adial producer wishes to rent the vacant space for $150,000 to producetheir dials. Does this change your decision??C. Give two qualitative factors would influence your decision and explain whythey would influence you.

The question is related to Make or buy decision. In case of make or buy decisions comparison is made…

Scrooge McDuck Safe Limited is considering buying the hinges it uses in the manufacture of vaults from an outside vendor. Currently, Scrooge McDuck Safe Limited makes the hinges in its own manufacturing facility. Scrooge McDuck Safe Limited can buy the hinges for $1.50 each. The company uses 900,000 hinges each year. Fixed cost for Scrooge McDuck Safe Limited would not change if the company stopped making the hinges. Information about Scrooge McDuck Safe Limited's cost to manufacture the 900,000 casters follows: Total $450,000 90,000 360,000 225.000 $1,125,000 Per Unit $.50 .10 .40 25 $1.25 Direct material Direct labor Variable overhead Fixed overhead Total Required: A. Prepare a relevant cost schedule that indicates whether Scrooge McDuck Safe Limited should buy the hinges or continue to make them. B. If Scrooge purchased the hinges, management has approached you that a dial producer wishes to rent the vacant space for $150,000 to produce their dials. Does this change your decision?? C. Give two qualitative factors would influence your decision and explain why they would influence you.

Scrooge McDuck Safe Limited is considering buying the hinges it uses in the manufacture of vaults from an outside vendor. Currently, Scrooge McDuck Safe Limited makes the hinges in its own manufacturing facility. Scrooge McDuck Safe Limited can buy the hinges for $1.50 each. The company uses 900,000 hinges each year. Fixed cost for Scrooge McDuck Safe Limited would not change if the company stopped making the hinges. Information about Scrooge McDuck Safe Limited's cost to manufacture the 900,000 casters follows: Total $450,000 90,000 360,000 225.000 $1,125,000 Per Unit $.50 .10 .40 25 $1.25 Direct material Direct labor Variable overhead Fixed overhead Total Required: A. Prepare a relevant cost schedule that indicates whether Scrooge McDuck Safe Limited should buy the hinges or continue to make them. B. If Scrooge purchased the hinges, management has approached you that a dial producer wishes to rent the vacant space for $150,000 to produce their dials. Does this change your decision?? C. Give two qualitative factors would influence your decision and explain why they would influence you.

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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