Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 16,600 units of the part that are needed every year. Per Unit $ 3.80 $ 4.50 $ 7.50 $ 8.20 $ 8.80 $ 5.80 Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead An outside supplier has offered to make the part and sell it to the company for $31.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $22,600 of these allocated general overhead costs would be avoided. Required: a. Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Complete this question by entering your answers in the tabs below.
Required A
Required B
Which alternative should the company choose?
The total cost of the "make" alternative is
by
Therefore, the company should
the part.
< Required A
Required B >
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Required A Required B Which alternative should the company choose? The total cost of the "make" alternative is by Therefore, the company should the part. < Required A Required B >
Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of
producing the 16,600 units of the part that are needed every year.
Per Unit
$ 3.80
$ 4.50
$ 7.50
$ 8.20
$ 8.80
$ 5.80
Direct materials
Direct labor
Variable overhead
Supervisor's salary
Depreciation of special equipment
Allocated general overhead
An outside supplier has offered to make the part and sell it to the company for $31.00 each. If this offer is accepted, the supervisor's
salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was
purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire
company. If the outside supplier's offer were accepted, only $22,600 of these allocated general overhead costs would be avoided.
Required:
a. Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the
company.
b. Which alternative should the company choose?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside
the company.
Make
Buy
Direct materials
Direct labor
Variable overhead
Supervisor's salary
Depreciation of special equipment
Allocated general overhead
Outside purchase price
Total cost
Required A
Required B >
Transcribed Image Text:Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 16,600 units of the part that are needed every year. Per Unit $ 3.80 $ 4.50 $ 7.50 $ 8.20 $ 8.80 $ 5.80 Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead An outside supplier has offered to make the part and sell it to the company for $31.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $22,600 of these allocated general overhead costs would be avoided. Required: a. Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the company. b. Which alternative should the company choose? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the company. Make Buy Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Outside purchase price Total cost Required A Required B >
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