which one is correct option? Striker Corporation produces a part that is used in the manufacture ofone of its products. The costs associated with the production of 12,000units of this part are as follows:Direct materials86,000 euroDirect labor130,000 euroVariable factory overhead57,000 euroFixed factory overhead135,000 euroTotal costs408,000 euroOf the fixed factory overhead costs, 63,000 euros is avoidable.Assuming no other use of their facilities, the highest price thatMcMurphy should be willing to pay to buy externally 12,000 units of thepart isa. 273,000 eurob. 345,000 euroc. 408,000 eurod. 336,000 euro

To determine the highest price McMurphy should be willing to pay, calculate the "relevant costs" -…

Answered: Striker Corporation produces a part…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PB: The following product costs are available for Stellis Company on the production of erasers: direct...

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Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $87,000 Direct labor: $126,000 Variable factory overhead: $58,000 Fixed factory overhead: $136,000 Total costs: $407,000 Of the fixed factory overhead costs, $55,000 is avoidable Assuming no other use of their facilities, the highest price that Piels should be willing to pay for 10,000 units of the part is ?
Pharoah Company manufactured 6,720 units of a component part that is used in its product and incurred the following costs: Direct materials $39,200 Direct labor 16,800 Variable manufacturing overhead 11,200 Fixed manufacturing overhead 22,400 $89,600 Another company has offered to sell the same component part to the company for $13 per unit. The fixed manufacturing overhead consists mainly of depreciation on the equipment used to manufacture the part and would not be reduced if the component part was purchased from the outside firm. If the component part is purchased from the outside firm, Pharoah Company has the opportunity to use the factory equipment to produce another product which is estimated to have a contribution margin of $24,640.Prepare an incremental analysis report for Pharoah Company which can serve as informational input into this make or buy decision.
Jensen Corporation produces a part for use in the production of one of its products. The per-unit costs associated with the annual production of 1,000 units of this part are as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total costs $5.25 $12.00 $2.75 $6.00 $26.00 $2,500 of the fixed factory overhead costs associated with the production of this product are common fixed costs. Wells Company has offered to sell 1,000 units of the same part to Jensen Corporation for $21 per unit. Jensen should: Select one: O a. Buy the part, because this would save the company $5.00 per unit. O b. Make the part, because this would save the company $1.00 per unit. O c. Make the part, because this would save the company $2,500 annually. O d. Buy the part, because this would save the company $2,500 annually.
Z Inc. manufactures a component Zeta which it uses in production of its main product. The manufacturing costs per unit of Zeta are as follows: Item Cost per unit Direct material Direct labor Variable manufacturing overhead Fixed manufacturing overhead 3.50 4.50 2.50 2.00 Annual requirement of Zeta is 8,000 units. Fixed manufacturing overhead is allocated to Zeta based on machine-hours used in its production and cannot be avoided if production of Zeta is stopped. An outside supplier has offered Z Inc. to supply 8,000 units at a total cost of $96,000. If Z Inc. purchases the component Zeta from the outside supplier, how will it affect its operating income? a. Operating income will increase by $4,000 b. Operating income will decrease by $4,000 c. Operating income will increase by $6,000 d. Operating income will decrease by $12,000
Scott Corporation produces a part for use in the production of one of its products. The per-unit costs associated with the annual production of 1,000 units of this part are as follows: Direct Materials $10.50 $24.00 Direct labor Variable factory overhead $5.50 Fixed factory overhead $12.00 Total Costs $52.00 $5,000 of the fixed factory overhead costs associated with the production of this product are common fixed costs. Larson Company has offered to sell 1,000 units of the same part to Scott Corporation for $42 per unit. Scott should: Select one: a. buy the part, because this would save $10.00 per unit. X b. buy the part, because this would save the company $5,000 annually. c. make the part, because this would save the company $5,000 annually. d. make the part, because this would save $2.00 per unit.
Lincoln Company produces a part that is used in the manufacture of one of its productsThe unit manufacturing costs of this part, assuming a production level of 5,000 units, are as follows Direct materials $3 Direct labor (variable cost) 5 Variable manufacturing overhead 4 Fixed manufacturing overhead 2 Total cost $14 Erickson Company has offered to sell 5,000 units of the same part to Lincoln Company for $13 per unit. Assuming the company has no other use for its facilities and that the fixed manufacturing costs are unavoidable , what should Lincoln Company do make it or buy it? **Show your work to support your answer
Fird Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows: Direct materials $20 Direct labor 15 Variable factory overhead 16 Fixed factory overhead 15 Total costs $66 The fixed factory overhead costs are unavoidable. Assuming no other use of their facilities, the highest price that Fird Company should be willing to pay for the part is _____. A. $41 B. $35 C. $45 D. $51
Crane Company has decided to introduce a new product that can be manufactured by either a capital-intensive method or a labour-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs under the two methods are as follows: Direct materials Direct labour Variable overhead Fixed manufacturing costs Capital-Intensive $10.00 per unit $12.00 per unit $6.00 per unit $2,624,960 Labour-Intensive $11.00 per unit $16.00 per unit $9.00 per unit $1,612,000 Crane's market research department has recommended an introductory unit sales price of $64. The incremental selling expenses are estimated to be $522,080 annually, plus $4 for each unit sold, regardless of the manufacturing method.
(Management Accounting) Davidson Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows: Direct materials $108,000 Direct labor 156,000 Variable factory overhead 70,000 Fixed factory overhead 168,000 Total costs $502,000 Of the fixed factory overhead costs, $72,000 are avoidable. Assuming there is no other use for the facilities. What is the highest price Davidson Company should be willing to pay for 5,000 units of the part? A) $264,000 B) $334,000 C) $406,000 D) $502,000
Sheddon Industries produces two products. The products' identified costs are as follows: Product A Product B Direct materials $20,000 $15,000 Direct labor $12,000 $24,000 The company's overhead costs of $108,000 are allocated based on direct labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What is the cost per unit for product B? (Do not round your intermediate calculations.)

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