Vak Corporation has the excess manufacturing capacity to fill a special order from Nash, Inc. Using Novak's normal costing process variable costs of the special order would be $26,700 and fixed costs would be $37400. Of the foed costs, $7.700 would be for unavoidable overhead costs, and the remainder for rent on a special machine needed to complete the order. What is the minimum price Novak should quote to Nash?
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- Glide Behind Corporation manufactures and sells small cargo trailers. The Wheel Division creates parts that are both sold externally and transferred internally to the Assembly Division. Variable production costs of wheel set #102 are $80, and each set sells externally for $150. What would you recommend as the internal transfer price from the Wheel Division to the Assembly Division if a competitive external market exists for wheel set #102? Would your answer change if there were no external market this component? Why? What would the transfer price be if upper management required cost plus 25 percent as the transfer price?Galla Incorporated needs to determine a price for a new product. Galla desires a 25% markup on the total cost of the product. Galla expects to sell 5,000 units. Additional information is as follows: Fixed Costs (total) Variable Costs per Unit Direct materials Direct labor $ 21 Overhead 22 General and administrative 20 26 Overhead General and administrative Using the total cost method what price should Galla charge? $ 45,000 18,000Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 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: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 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 230,000 switches per year and what is the total cost of that alternative?
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- Value Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 32,000 parts is $90,000, which includes fixed costs of $30,000 and variable costs of $60,000. The company can buy this part from an external supplier for $5 per unit and avoid 10% of the fixed costs. If Value Electronics decides to outsource the production of the part, how will it impact its operating income? A. Operating income increases by $97,000. B. Operating income decreases by $100,000. C. Operating income decreases by $97,000. D. Operating income increases by $100,000.Crane Industries incurs unit costs of $6 ($4 variable and $2 fixed) in making an assembly part for its finished product. A supplier offers to make 13,500 of the assembly part at $5 per unit. If the offer is accepted, Crane will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, that Crane will realize by buying the part. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Variable manufacturing costs Fixed manufacturing costs Purchase price Total annual cost The decision should be to $ Make the part $ Buy $ $ Net Income Increase (Decrease)Sweet Acacia Inc. makes unfinished bookcases that it sells for $58. Production costs are $38 variable and $9 fixed. Because it has unused capacity, Sweet Acacia is considering finishing the bookcases and selling them for $72. Variable finishing costs are expected to be $7 per unit with no increase in fixed costs. Prepare an analysis on a per-unit basis that shows whether Sweet Acacia should sell unfinished or finished bookcases. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Sales per unit Variable cost per unit Fixed cost per unit Total per unit cost Net income per unit The bookcases 69 $ Sell ✓processed further. LA GA Process Further $ $ Net Income Increase (Decrease)
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