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Alanco, Incl manufactures a variety of products and is currently maunfacturing all of its own component parts. 2 An outside supplier has offered to sell one of those components to Alanco. To evaluate this offer, the following 3 information has been gathered relating to the cost of producing the component internally: 4 5 Direct materials 6 Direct labor 7 Variable manufacturing overhead 4.00 6.00 2.00

Alanco, Incl manufactures a variety of products and is currently maunfacturing all of its own component parts. 2 An outside supplier has offered to sell one of those components to Alanco. To evaluate this offer, the following 3 information has been gathered relating to the cost of producing the component internally: 4 5 Direct materials 6 Direct labor 7 Variable manufacturing overhead 4.00 6.00 2.00

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Alanco Inc. manufactures a veriety of products and is currently manufacturing all of its own component parts.

 

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1 Alanco, Ind manufactures a variety of products and is currently maunfacturing all of its own component parts. 2 An outside supplier has offered to sell one of those components to Alanco. To evaluate this offer, the following 3 information has been gathered relating to the cost of producing the component internally: 4 5 Direct materials 6 Direct labor 7 Variable manufacturing overhead 8 Fixed manufacturing overhead, traceable* 9 Fixed manufacturing overhead, common but allocated 10 Total cost $ 4.00 6.00 2.00 5.00 8.00 25.00 11 12 Supplier price 21.00 13 14 Units used per year 12,000 15 16 *Fixed manufacturing overhead, traceable is composed of two items: 17 30% Depreciation of equipment (no resale value) Supervisor salary 18 70% 19 20 1. Assuming the company has no alternative use for the facilities now being used to produce the 21 component, complete the following analysis to determine if the outside supplier's offer should be accepted. 22 23 Per Unit Differential Cost 12,000 units 24 Make Buy Make Buy 25 26 Cost of purchasing 27 Direct materials 28 Direct labor 29 Variable manufacturing overhead 30 Fixed manufacturing overhead, traceable 31 Fixed manufacturing overhead, common 32 Total costs 33 34 Based on this analysis, write an if statement to determine if Alanco should make or buy the component. 35 36 Alanco should the component 37 38 39 40
Transcribed Image Text:1 Alanco, Ind manufactures a variety of products and is currently maunfacturing all of its own component parts. 2 An outside supplier has offered to sell one of those components to Alanco. To evaluate this offer, the following 3 information has been gathered relating to the cost of producing the component internally: 4 5 Direct materials 6 Direct labor 7 Variable manufacturing overhead 8 Fixed manufacturing overhead, traceable* 9 Fixed manufacturing overhead, common but allocated 10 Total cost $ 4.00 6.00 2.00 5.00 8.00 25.00 11 12 Supplier price 21.00 13 14 Units used per year 12,000 15 16 *Fixed manufacturing overhead, traceable is composed of two items: 17 30% Depreciation of equipment (no resale value) Supervisor salary 18 70% 19 20 1. Assuming the company has no alternative use for the facilities now being used to produce the 21 component, complete the following analysis to determine if the outside supplier's offer should be accepted. 22 23 Per Unit Differential Cost 12,000 units 24 Make Buy Make Buy 25 26 Cost of purchasing 27 Direct materials 28 Direct labor 29 Variable manufacturing overhead 30 Fixed manufacturing overhead, traceable 31 Fixed manufacturing overhead, common 32 Total costs 33 34 Based on this analysis, write an if statement to determine if Alanco should make or buy the component. 35 36 Alanco should the component 37 38 39 40
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What is the equation for Fixed MFG Over head, traceable? What is the equation for Fixed MFG Overhead, Common? 

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33 34 Based on this analysis, write an if statement to determine if Alanco should make or buy the component. 35 36 37 38 Alanco should the component
Transcribed Image Text:33 34 Based on this analysis, write an if statement to determine if Alanco should make or buy the component. 35 36 37 38 Alanco should the component
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