Waterways Continuing Problem 20 a, b1-b2 (Part 2) Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 452,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $12.56. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,321, and the cost of producing the units would be $9.70 a unit. |Your answer is incorrect. Try again. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should buy the fitting. Incremental cost / (savings) will be $ 1808 LINK TO TEXT LINK TO TEXT LINK TO TEXT | Your answer is incorrect. Try again. What is Waterways' opportunity cost if it chooses to buy the small fitting and start manufacturing the timing unit? The opportunity cost is 13560 LINK TO TEXT LINK TO TEXT LINK TO TEXT |Your answer is incorrect. Try again. Would it be wise for Waterways to buy the fitting and manufacture the timing unit? The company should buy small fittings and make the timing units.
Waterways Continuing Problem 20 a, b1-b2 (Part 2) Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 452,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $12.56. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,321, and the cost of producing the units would be $9.70 a unit. |Your answer is incorrect. Try again. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should buy the fitting. Incremental cost / (savings) will be $ 1808 LINK TO TEXT LINK TO TEXT LINK TO TEXT | Your answer is incorrect. Try again. What is Waterways' opportunity cost if it chooses to buy the small fitting and start manufacturing the timing unit? The opportunity cost is 13560 LINK TO TEXT LINK TO TEXT LINK TO TEXT |Your answer is incorrect. Try again. Would it be wise for Waterways to buy the fitting and manufacture the timing unit? The company should buy small fittings and make the timing units.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Waterways Continuing Problem 20 a, b1-b2 (Part 2)
Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit
could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that
cannot be eliminated by buying this unit. Waterways needs 452,000 of these units each year.
If Waterways decides to buy rather than produce the small fitting, it can devote the machinery
and labor to making a timing unit it now buys from another company. Waterways uses
approximately 400 of these units each year. The cost of the unit is $12.56. To aid in the
production of this unit, Waterways would need to purchase a new machine at a cost of $2,321,
and the cost of producing the units would be $9.70 a unit.
|Your answer is incorrect. Try again.
Without considering the possibility of making the timing unit, evaluate whether Waterways
should buy or continue to make the small fitting.
The company should
buy
the fitting. Incremental cost / (savings) will be $
1808
LINK TO TEXT LINK TO TEXT LINK TO TEXT
| Your answer is incorrect. Try again.
What is Waterways' opportunity cost if it chooses to buy the small fitting and start
manufacturing the timing unit?
The opportunity cost is
13560
LINK TO TEXT LINK TO TEXT
LINK TO TEXT
|Your answer is incorrect. Try again.
Would it be wise for Waterways to buy the fitting and manufacture the timing unit?
The company should
buy
small fittings and
make
the timing units.
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 4 steps
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