Your bike helmet company is expecting demand for an additional 4,000 helmets in the upcoming year. While you have the capacity to handle the additional demand, a potential supplier has offered to make the 4,000 helmets for $9 per helmet. Other information from the financial accounting system is listed below. Should you make or buy the helmets? Commuter bike helmet Direct material Direct labor Manufacturing overhead: variable Non-manufacturing overhead: variable Total variable cost $6.54 $1.89 $1.07 $0.86 $10.36

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Your bike helmet company is expecting demand for an additional 4,000 helmets in the upcoming year. While you
have the capacity to handle the additional demand, a potential supplier has offered to make the 4,000 helmets for
$9 per helmet. Other information from the financial accounting system is listed below. Should you make or buy
the helmets?
Commuter bike helmet
Direct material
Direct labor
Manufacturing overhead: variable
Non-manufacturing overhead: variable
Total variable cost
Manufacturing overhead: fixed
Non-manufacturing overhead: fixed
Total fixed cost
Total cost
Commuter helmet price
Machine hour
$6.54
$1.89
$1.07
$0.86
$10.36
$1.78
$0.98
$2.76
$13.12
$16.00
0.57
Transcribed Image Text:Your bike helmet company is expecting demand for an additional 4,000 helmets in the upcoming year. While you have the capacity to handle the additional demand, a potential supplier has offered to make the 4,000 helmets for $9 per helmet. Other information from the financial accounting system is listed below. Should you make or buy the helmets? Commuter bike helmet Direct material Direct labor Manufacturing overhead: variable Non-manufacturing overhead: variable Total variable cost Manufacturing overhead: fixed Non-manufacturing overhead: fixed Total fixed cost Total cost Commuter helmet price Machine hour $6.54 $1.89 $1.07 $0.86 $10.36 $1.78 $0.98 $2.76 $13.12 $16.00 0.57
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