he Haven Machine Company makes 40,000 screws to be used in the production of its washing machines. The cost per screw at this level of activity is: Direct materials
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The Haven Machine Company makes 40,000 screws to be used in the production of its washing machines. The cost per screw at this level of activity is:
Direct materials |
£3.50 |
Direct labour |
£3.60 |
Variable manufacturing |
£2.75 |
Fixed manufacturing overhead |
£4.45 |
An outside supplier has offered to supply all the screws the company needs for £14 each. If O.T. Company decided not to make the screws, none of the fixed
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- Juanita Company must decide whether to make or buy some of its components for the appliances it produces. The costs of producing 166,000 electrical cords for its appliances are as follows: $90,000 $32,000 $20,000 $24,000 Direct materials Variable overhead Direct labor Fixed overhead Instead of making the electrical cords at an average cost per unit of $1.00 ($166,000/166,000), the company has an opportunity to buy the cords at $0.90 per unit. If the company purchases the cords, all variable costs will be eliminated. What is the total relevant cost per unit in deciding either to buy or produce the component? After considering the incremental costs and benefits, should the company continue to produce or buy the cords from the supplier?JTA Corp must decide whether to make or buy some of its components for the appliances it produces. The cost of producing 166,000 electrical cords for its appliances are as follows Direct materials 90,000 Direct Labor 32,000 Variable overhead 19,100 Fixed overhead 24,900 Instead of making the electrical cords at an average cost per unit of 10, the Company has an opportunity to buy the cords at 0 90 per unit. If the Company purchases the cords, all vanable costs are eliminated. What is the total relevant cost per unit in deciding either to buy or produce the component?The SP Corporation makes 32,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is: Direct materials $9.10 $8.10 $3.25 $4.20 Direct labor Variable manufacturing overhead Fixed manufacturing overhead An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to SP Corporation for this motor is $22.75. If SP Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. The annual financial advantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be: Multiple Cholce ($60,800) $177,600 $73,600 $134,400
- Snow Ride manufactures snowboards. Its cost of making 1,900 bindings is as follows: Direct materials $ 17,590 Direct laabor 3,200 Variable overhead 2,080 Fixed overhead 6,300 Total manufacturing cost for 1,900 bindings $ 29,170 Suppose Livingston will sell bindings to Snow Ride for $13 each. Snow Ride would pay $3 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.50 per binding. Requirments: 1. Snow Ride's accountants predict that purchasing the bindings from livingston will enable the company to avoid $2,100 of fixed overhead. Prepare an analysis to show whether Snow Ride should make or buy the bindings. 2. The facilities freed by purchasing bindings from…Juanita Company must decide whether to make or buy some of its components for the appliances it produces. The costs of producing 166,000 electrical cords for its appliances are as follows. Direct materials $90,000 Variable overhead $32,000 Direct labor 20,000 Fixed overhead 24,000 Instead of making the electrical cords at an average cost per unit of $1.00 ($166,000 - 166,000), the company has an opportunity to buy the cords at $0.90 per unit. If the company purchases the cords, all variable costs and one-fourth of the fixed costs will be eliminated. Required a- Prepare an incremental analysis showing whether the company should make or buy the electrical cords b- Will your answer be different if the released productive capacity will generate additional income of $5,000? Managerial Accounting - Ch.7The SP Corporation makes 40,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is: Direct materials $5.50 $5.60 Direct labor Variable manufacturing overhead $4.75 Fixed manufacturing overhead $4.45 An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to SP Corporation for this motor is $18. If SP Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. The annual financial advantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be: $276,000 $86,000 ($92,000) O $178,000
- Daily Kneads, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $20,000 for 20,000 pounds of the product. The costs per pound to make this product include: Cost per Pound $0.30 Direct Labor Direct Materials $0.60 $0.70 Allocated Unavoidable Overhead If Daily Kneads outsources, what is the savings (or loss) per pound for the company as a whole? If the amount is a loss include a negative sign (not parentheses) in your answer. "_"Charge Company manufactures a part for its production cycle. The annual costs per unit for 5,000 units of the part are given below. The fixed factory overhead costs are unavoidable. Another company has offered to sell 5,000 units of the same part to Charge Company for $15 per unit. The facilities currently used to make the part could be rented out to another manufacturer for $20,000 a year. Charge Company should Per Unit Direct materials $3.00 Direct labor 5.00 Variable factory overhead Fixed factory overhead Total costs 4.00 2.00 $14.00 buy the part and rent facilities to save $5,000 ) make the part to save $15,000 O buy the part and rent facilities to save $15,000 make the part to save $5,000 O make the part to save $10,000 OBlossom Company must decide whether to make or buy some of its components. The costs of producing 62,600 switches for its generators are as follows. Direct materials $29,800 Direct labor $29,940 Variable overhead Fixed overhead Instead of making the switches at an average cost of $2.90 ($181,540 ÷ 62,600), the company has an opportunity to buy the switches at $2.74 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated. (a) Direct materials Direct labor Variable manufacturing costs Fixed manufacturing costs Purchase price Total cost $45,400 $76,400 Prepare an incremental analysis showing whether the company should make or buy the switches. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Senter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount Senter a total amount Make…
- Erika Company makes 70,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials £17.80 Direct labour 19.00 Variable manufacturing overhead 1.00 Fixed manufacturing overhead 17.10 Unit product cost £54.90 An outside supplier has offered to sell the company all of these parts it needs for £48.50 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be £273,000 per year.If the part were purchased from the outside supplier, all of the direct labour cost of the part would be avoided. However, £8.20 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the…Snowy Mountain manufactures snowboards. Its cost of making 19,000 bindings is as follows Direct material $22000 Direct Labor $81000 Variable Manufacturing overhead $44000 Fixed Manufacturing overhead $81000 Total manufacturing costs $228000 Cost/per ($228000/19000) $12.00 The data from the table are as follows: Suppose an outside supplier will sell bindings to Snowy Mountain for $15 each. Snowy Mountain would pay $2.00 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost $0.50 of per binding. Requirements 1. Snowy Mountain’s accountants predict that purchasing the bindings from an outside supplier will enable the company to avoid $1,900 of fixed overhead. Prepare an analysis to show whether the company should make or buy the bindings. 2. The facilities freed by purchasing bindings from the outside supplier can be used to manufacture another product that will contribute $3,100 to profit. Total fixed costs will be the same…Notson, Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Notson for $420 each. Notson needs 1,200 clocks annually. Notson has provided the following unit costs for its commercial clocks: Direct materials Direct labor Variable overhead Fixed overhead (40% avoidable) $100 140 80 150 What is the incremental effect on net income if Notson choses to outsource the production of the 1,000 clocks annually? Should Notson make or buy the clocks?