You make widgets, which is a subassembly for you main product of whatsup. An outside vendor has provided you with a quote to supply the widget part for $ 72.00 per unit Your cost records show the following: Your projected production for the widget is 12,500 units Item of Cost Per Unit Cost Direct Material $18.75 Direct Labor $38.00 Variable manufacturing overhead $9.25 Lease on manufacturing facility $36,000.00 per year Depreciation of equipment $2.50 Allocated Corporate Expenses $1.25 If this offer is accepted, you can sublease the manufacturing facility for $15,000 per year All direct and variable costs can be avoided. The equipment has no salvage value How much would net operating income be changed if the outside supplier offer was accepted? Show all calculations for full credit
You make widgets, which is a subassembly for you main product of whatsup. An outside vendor has provided you with a quote to supply the widget part for $ 72.00 per unit Your cost records show the following: Your projected production for the widget is 12,500 units Item of Cost Per Unit Cost Direct Material $18.75 Direct Labor $38.00 Variable manufacturing overhead $9.25 Lease on manufacturing facility $36,000.00 per year Depreciation of equipment $2.50 Allocated Corporate Expenses $1.25 If this offer is accepted, you can sublease the manufacturing facility for $15,000 per year All direct and variable costs can be avoided. The equipment has no salvage value How much would net operating income be changed if the outside supplier offer was accepted? Show all calculations for full credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
| You make widgets, which is a subassembly for you main product of whatsup. An outside vendor | ||||
| has provided you with a quote to supply the widget part for | $ 72.00 | per unit | ||
| Your cost records show the following: | ||||
| Your projected production for the widget is | 12,500 | units | ||
| Item of Cost | Per Unit Cost | |||
| Direct Material | $18.75 | |||
| Direct Labor | $38.00 | |||
| Variable manufacturing |
$9.25 | |||
| Lease on manufacturing facility | $36,000.00 | per year | ||
| $2.50 | ||||
| Allocated Corporate Expenses | $1.25 | |||
| If this offer is accepted, you can sublease the manufacturing facility for | $15,000 | per year | ||
| All direct and variable costs can be avoided. The equipment has no salvage value | ||||
| How much would net operating income be changed if the outside supplier offer was accepted? | ||||
| Show all calculations for full credit |
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