Hi expart Provide solution Striker Corporation produces a part that is used in the manufacture of one ofits products. The costs associated with the production of 12,000 units of thispart are as follows:Direct materials86,000 euroDirect labor130,000 euroVariable factory overhead 57,000 euroFixed factory overheadTotal costs135,000 euro408,000 euroOf the fixed factory overhead costs, 63,000 euros is avoidable. Assuming noother use of their facilities, the highest price that McMurphy should be willingto pay to buy externally 12,000 units of the part isa. 273,000 eurob. 345,000 euroc. 408,000 eurod. 336,000 euro

Our goal here is to figure out the highest price that Striker Corporation should be willing to pay…

Answered: Striker Corporation produces a part…

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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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 ?
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.
What are the fixed overhead costs of making the component?
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.
Shosalosa Company 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 45 000 Direct labor 65 000 Variable factory overhead 30 000 Fixed factory overhead 70 000 Total costs 210 000 Of the fixed factory overhead costs, R30 000 is avoidable. Phrasa Company has offered to sell 10 000 units of the same part to Shosalosa Company for R18 per unit. Assuming there is no other use for the facilities, Shosalosa should as this would save R per unit.
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
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.
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.)
Sheffield Corp. incurs the following costs to produce 10500 units of a subcomponent: Direct materials Direct labor Variable overhead Fixed overhead $(3600). $9200 Ⓒ$8150. $950. $(950). 11750 13000 An outside supplier has offered to sell Sheffield the subcomponent for $2.80 a unit. No fixed costs are avoidable. If Sheffield accepts the offer, it could use the production capacity to produce another product that would generate additional income of $3600. The increase (decrease) in net income from accepting the offer would be 20800
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $21, computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost An outside supplier has offered to provide the annual requirement of 4,400 of the parts for only $10 each. The company estimates that 50% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be: Multiple Choice $8 7 2 4 $ 21 $9 per unit on average
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

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