Toyang Inc. produces 100,000 units of Part 34B, used in one of its snowblowerengines, each year. An outside supplier has offered to supply the part for $4.75. The unit cost is: Direct material - $0.5; Direct labor - 2.4; Variable overhead (power) - 0.9; Fixed overhead -1.05; Total unit cost - $4.85. Overhead is applied on the basis of machine hours. Part 348 requires 30,000 machine hours peryear. Which alternative is more conservative and by how much? * a.Buy, because of the lower purchase price by $.10. Therefore, the company would save $10,000. b.Make, since the company would be able to save by fixed overhead by over $50,000. C.Buy, the company would be able to save $95,000. d.Make, since the company would be able to save variable costs up to $20,000. What if $60,000 of fixed overhead is supervision for Part 34B that is avoided if the part is purchased? Which alternative is more cost effective and by how much? " a.Buy, because of the company would be able to avoid $60,000 fixed overhead from supervision. b.Make, since the company would be able to save by fixed overhead by over $50,000. G.Buy, the company would be able to save $70,000 of variable costs. d.Make, since the company would still be able to save by as much as $35,000 despite the additional fixed overhead.
Toyang Inc. produces 100,000 units of Part 34B, used in one of its snowblowerengines, each year. An outside supplier has offered to supply the part for $4.75. The unit cost is: Direct material - $0.5; Direct labor - 2.4; Variable overhead (power) - 0.9; Fixed overhead -1.05; Total unit cost - $4.85. Overhead is applied on the basis of machine hours. Part 348 requires 30,000 machine hours peryear. Which alternative is more conservative and by how much? * a.Buy, because of the lower purchase price by $.10. Therefore, the company would save $10,000. b.Make, since the company would be able to save by fixed overhead by over $50,000. C.Buy, the company would be able to save $95,000. d.Make, since the company would be able to save variable costs up to $20,000. What if $60,000 of fixed overhead is supervision for Part 34B that is avoided if the part is purchased? Which alternative is more cost effective and by how much? " a.Buy, because of the company would be able to avoid $60,000 fixed overhead from supervision. b.Make, since the company would be able to save by fixed overhead by over $50,000. G.Buy, the company would be able to save $70,000 of variable costs. d.Make, since the company would still be able to save by as much as $35,000 despite the additional fixed overhead.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Pls answer both questions.
Transcribed Image Text:Toyang Inc. produces 100,000 units of Part 34B, used in one of its snowblowerengines, each year. An
outside supplier has offered to supply the part for $4.75. The unit cost is: Direct material - $0.5; Direct
labor - 2.4; Variable overhead (power) - 0.9; Fixed overhead-1.05; Total unit cost - $4.85. Overhead is
applied on the basis of machine hours. Part 34B requires 30,000 machine hours peryear. Which
alternative is more conservative and by how much? *
a.Buv, because of the lower purchase price by $.10. Therefore, the company would save $10,000.
b.Make, since the company would be able to save by fixed overhead by over $50,000.
C.Buy, the company would be able to save $95,000.
d.Make, since the company would be able to save variable costs up to $20,000.
What if $60,000 of fixed overhead is supervision for Part 34B that is avoided if the part is purchased?
Which alternative is more cost effective and by how much? *
a.Buy, because of the company would be able to avoid $60,000 fixed overhead from supervision.
b.Make, since the company would be able to save by fixed overhead by over $50,000.
C.Buy, the company would be able to save $70,000 of variable costs.
d.Make, since the company would still be able to save by as much as $35,000 despite the additional
fixed overhead.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education