Stoltenberg Corp currently manufactures a part for one of its products. However, management is considering buying this part from an outside supplier instead. Management hasput together the first two columns in the incremental analysis table below:MakeBuyDirect Materials$112,000$0Direct Labor$138,000$0Variable MOH$54,000$0Fixed MOH$75,000$37,000Purchase Price$0$348,000Based on this information, should Stoltenberg Corp make or buy the part?Buy the part.Make the part.Cannot be determined.

Based on the incremental analysis, Stoltenberg Corp should opt to buy the part from an outside…

Answered: Stoltenberg Corp currently manufactures…

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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QRC Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below: Alternative A Alternative B Projected revenue $ 125,000 $ 150,000 Unit-level costs 25,000 36,000 Batch-level costs 12,500 24,000 Product-level costs 15,000 17,000 Facility-level costs 10,000 12,500 What is the differential revenue for this decision? Multiple Choice $50,000 $25,000 $125,000 $150,000
A manufacturer is considering whether to make or buy a component used in its production. The annual cost of producing the 10,000 parts is as follows. Direct variable manufacturing costs $ 300,000Direct fixed manufacturing costs $ 100,000Allocated overhead $ 50,000 If the manufacture buys the component, the direct fixed manufacturing costs can be reduced by 73 per cent. What is the maximum unit purchasing price that makes purchasing a beneficial decision in comparison to making?
G
A component of the direct materials cost requires the nectar of a specific plant in South America. If the company could eliminate this special ingredient, the materials cost would decrease by 25%. However, this would require design changes of $300,000 to engineer a chemical equivalent of the ingredient. Will this design change allow the product to meet its target cost?
Applesoft produces tablets, laptops and televisions. Applesoft typically sells 1,000 tablets a year. The tablet information is as follows: Selling price per unit $60 Direct material cost per unit Direct labor cost per unit Total allocated overhead (1/4 avoidable if eliminate tablets) $80,000 One fourth of the allocated overhead would be avoidable if the tablets were eliminated. How much would Operating Income change by if Applesoft were to eliminate the tablets? Be sure to include "-" in front of your amount if net income will decrease $30 $15
Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding that has not been as profitable as planned. Because Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $200 selling price per unit. Its fixed costs for the year are expected to be $270,000. Variable costs for the year are expected to be $140 per unit. Required 1. Estimate Product XT's break-even point in terms of (a) sales units and (b) sales dollars. Check (10) Break-even sales, 4,500 units 2. Prepare a contribution margin income statement for Product XT at the break-even point.
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Praveen Co. manufactures and markets a number of rope products. Management is considering the future of Product XT, a special rope for hang gliding that has not been as profitable as planned. Because Product XT is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $200 selling price per unit. Its fixed costs for the year are expected to be $270,000. Variable costs for the year are expected to be $140 per unit. Required 1. Estimate Product XT's break-even point in terms of (a) sales units and (b) sales dollars. Check (1a) Break-even sales, 4,500 units 2. Prepare a contribution margin income statement for Product XT at the break-even point.
The Gargus Company, which manufactures projection equipment, is ready to introduce a new line of portable projectors. The following data are available for a proposed model: Variable manufacturing costs Applied fixed manufacturing overhead Variable selling and administrative costs Applied fixed selling and administrative costs $ 380 190 145 160 What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 205%?
Blue Spruce Tech produces 60,000 iPhone adapters with the following costs:
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