Answered: Unit Costs: DM P20 DL 28 Other Variable…

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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Each year, the company needs atleast 10,000 parts. A supplier has offered to sell a component to the company for ₱54 each. However, if the company choose to outsource the component of the product, it can use the facilities to make another product that would yield a total contribution margin of ₱60,000 per year. The unit cost for making the components is shown below

A. How much is the total cost to make the component?

B. How much is the total cost to buy the component?

C. How much is opportunity cost in the given problem?

D. What should be the optimal decision for the company?

Unit Costs:
DM
P20
DL
28
Other Variable Expenses
Allocated Facility-level Costs
10
Total Unit Cost
P60

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