Sunland Music produces 60000 CDs on which to record music. The CDs have the following costs:Direct Materials $11500Direct Labor13500Variable Overhead1500Fixed Overhead7000Sunland could avoid $4000 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company wouldprefer to buy the 60000 units externally, what is the maximum amount that Sunland should pay to purchase the units?$33500O $26500$30500O $29500 Vaughn Manufacturing can produce 100 units of a component part with the following costs:Direct Materials $14000Direct LaborVariable OverheadFixed Overhead5500900011000If Vaughn Manufacturing can purchase the component part externally for $35000 and only $4000 of the fixed costs can be avoided, what is the correct make-or-buy decision?Make and save $500Buy and save $500O Make and save $2500Buy and save $6500

Question 1The total cost of producing the CDs internally= $11,500 (Direct Materials) + $13,500…

Answered: Sunland Music produces 60000 CDs on…

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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Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.50 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Annual fixed costs Variable cost per switch Machine A $632,400 1.78 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 235,000 switches per year and what is the total cost of that alternative? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Machine B $ 860,100 0.80 Minimum number of switches For each machine, what is the minimum number of switches that…
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Answer the following questions. 1. Dalton Computers makes 5,500 units of a circuit board, CB76 at a cost of $250 each. Variable cost per unit is $170 and fixed cost per unit is $80. Peach Electronics offers to supply 5,500 units of CB76 for $230. If Dalton buys from Peach it will be able to save $15 per unit in fixed costs but continue to incur the remaining $65 per unit. Should Dalton accept Peach's offer? Explain. 2. TX Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: (Click the icon to view the information.) TX Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should TX Manufacturing replace the old machine? Explain. Relevant COSIS. Variable costs per unit Avoidable fixed costs per unit Purchase price per unit Unit relevant cost Cash operating costs Current disposal value of old machine Cost of new machine $ Total relevant costs 170 15 $ 185 $ 230 230 Dalton Computers should…
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Swifty's Manufacturing Company can make 100 units of a necessary component part with the following costs: Direct Materials Direct Labor Variable Overhead Fixed Overhead $117000 22000 49000 30000 If Swifty's Manufacturing Company purchases the component externally, $20000 of the fixed costs can be avoided. What is the maximum amount Swifty is willing to pay to purchase the 100 units? $218000 O $188000 $198000 $208000

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