Q. 8 Which following costs need to be considered for both make or buy options?O. Fixed overheadO. Variable overheadO. Rental revenue Q. 9 What is the per unit cost to purchase from the vendor? Round to the nearest penny.Q. 10 Based on your analysis, the CreativeStationary Co. should make the product in-house or buy them from the vender?O. MakeO. Buy Do (Q8,9,10 plz) CreativeStationary Co., a stationary company, currently produces 15,000 units of fountain pen peryear. It is anticipated that their fountain pen production will last for the next three years.• CreativeStationary Co. can continue to make the fountain pen on their own. The annual costsare shown in the table below.ItemExpenseDirect materials$20,000Direct labor$100,000Variables overhead (power)$150,000Fixed overhead (light and heat) $90,00If Creative Stationary Co. plans to produce the product in-house, annual direct material costs andthe fixed overhead will remain at its current level over the next three years. However, the directlabor will increase by $5,000 per year, and variable overhead costs will increase at the rate of 2%.• Instead of making the pen by themselves, a vendor has offered to sell CreativeStationary Co.units of fountain pens for $25 per unit. If CreativeStationary Co. choose to purchase fromvendor, some of the manufacturing facilities currently used to manufacture the fountain pencould be rented to a third party for $25,500 per year.The MARR is 4%.

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Answered: Q. 8 Which following costs need to be…

Q. 8 Which following costs need to be considered for both make or buy options? O. Fixed overhead O. Variable overhead O. Rental revenue

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 1CE: The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:...

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Patterson Corporation expects to incur 70,000 of factory overhead and 60,000 of general and administrative costs next year. Direct labor costs at 5 per hour are expected to total 50,000. If factory overhead is to be applied per direct labor hour, how much overhead will be applied to a job incurring 20 hours of direct labor? a. 120 b. 260 c. 28 d. 140
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