Wings Incorporated manufactures machine parts for aircraft engines. The CEO, Chucky Valters, was considering an offer from a subcontractor that would provide 2,300 units of product PQ107 for Valters for a price of $150.000. If Wings does not purchase these parts from the subcontractor it must produce them in-house with the following unit costs: Cost per Unit Direct materials $30 Direct labor 19 9 Variable overhead In addition to the above costs, if Wings produces part PQ107, it would have a retooling and design cost of $9,400. The relevant costs of producing 2,300 units of product PQ107 internally are:

Wings Incorporated manufactures machine parts for aircraft engines. The CEO, Chucky Valters, was considering an offer from a subcontractor that would provide 2,300 units of product PQ107 for Valters for a price of $150.000. If Wings does not purchase these parts from the subcontractor it must produce them in-house with the following unit costs: Cost per Unit Direct materials $30 Direct labor 19 9 Variable overhead In addition to the above costs, if Wings produces part PQ107, it would have a retooling and design cost of $9,400. The relevant costs of producing 2,300 units of product PQ107 internally are:

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 7EB: Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has...

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Wings Incorporated manufactures machine parts for aircraft engines. The CEO, Chucky Valters, was considering an offer from a subcontractor that would provide 2,400 units of product PQ107 for Valters for a price of $150,000. If Wings does not purchase these parts from the subcontractor it must produce them in-house with the following unit costs: Direct materials Direct labor Variable overhead Cost per Unit $31 19 8 In addition to the above costs, if Wings produces part PQ107, it would have a retooling and design cost of $9,800. The relevant costs of producing 2,400 units of product PQ107 internally are:
Concord Corporation manufactures widgets. Bowden Company has approached Concord with a proposal to sell the company widgets at a price of $88000 for 100000 units. The following costs are associated with Concord's production process when 100000 units are produced: Direct material Direct labor Manufacturing overhead Total $ 33000 29500 48500 $111000 Manufacturing overhead of $12150 of costs will be eliminated if the components are no longer produced by Concord. What is the incremental cost or savings to Concord if the widgets are bought instead of made? $23000 incremental savings $13350 incremental cost $10850 incremental savings $23000 incremental cost
ABC company manufactures a particular computer component. Currently, the cost per unit is as follows: Direct Materials;P50, Direct Labor,P500; Variable Overhead,P250; Fixed Overhead,P400XYZ company has obtained with an offer to sell 10,000 units of the component for P1,100 per unit. If ABC accepts the proposal, P2,500,000 of the fixed overhead will be eliminated. Should ABC make or buy the component? Select the correct response: Make due to savings of P3,000,000 Buy due to savings of P1,000,000 Buy due to savings of P2,500,000 Make due to savings of P500,000
Quirch Inc. manufactures machine parts for aircraft engines. The CEO, Chucky Valters, was considering an offer from a subcontractor that would provide 4,200 units of product PQ107 for Valters for a price of $150,000. If Quirch does not purchase these parts from the subcontractor it must produce them in-house with the following unit costs: Cost per Unit Direct materials $54 Direct labor 34 Variable overhead 17 In addition to the above costs, if Quirch produces part PQ107, it would have a retooling and design cost of $17,100. The relevant costs of producing 4,200 units of product PQ107 internally are:
Oriole Company manufactures widgets. Embree Company has approached Oriole with a proposal to sell the company widgets at a total selling price of $120000 for 100000 units. Oriole has the following cost associated the production of 100000 widgets: Direct materials Direct labor Manufacturing overhead Total $ 44000 42000 56000 $142000 Manufacturing overhead includes $25000 of costs that will be eliminated if the widgets are no longer produced by Oriole. What is the incremental cost or savings if the widgets are bought instead of made? $9000 incremental cost. $9000 incremental savings. $22000 incremental savings. $22000 incremental cost.
Assume that HASF furniture Inc., as described, currently purchases the chair cushions for its lawn set from an outside vendor for $30 per set. Modern Furniture’s chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the firm money. Additional information shows that if Modern furniture’s were to manufacture the cushions, the materials cost would be $16 and the labor cost would be $10 per set and that it would have to purchase cutting and sewing equipment, which would add $25,000 to annual fixed costs. Required Computation for 10,000 units What amount should have been inccrued if company produce 10,000 units What amount should have been inccrued if company purhcase 10,000 units from outside What amount company save if company make 10,000 cushions
Terry Inc. manufactures machine parts for aircraft engines. CEO Bucky Walters is considering an offer from a subcontractor to provide 2,000 units of product OP89 for $120,000. If Terry does not purchase these parts from the subcontractor, it must continue to produce them in-house with these costs: Cost per unit ($) Direct Materials 28 Direct Labor 18 Variable Overhead 16 Allocated Fixed Overhead 4 Required3. Which alternative is more attractive to Terry Inc, make or buy the machine parts?4. What strategic considerations likely bear on this make vs buy decision? (at least 2 considerations)
Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 per switch. Vista 's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 230,000 switches per year and what is the total cost of that alternative?
! Required information [The following information applies to the questions displayed below.] Each of the following situations is independent: Make or Buy Terry Incorporated manufactures machine parts for aircraft engines. CEO Bucky Walters is considering an offer from a subcontractor to provide 2,350 units of product OP89 for $190,350. If Terry does not purchase these parts from the subcontractor, it must continue to produce them in-house with these costs: Direct materials Direct labor Variable overhead Allocated fixed overhead Required: Cost per Unit $ 35 25 23 4 1. What is the relevant cost per unit to make the product internally? 2. What is the estimated increase or decrease in short-term operating profit of producing the product internally versus purchasing the product from a supplier?
Camilla Company manufactures mobile phones. Mark Company has approached Camilla with a proposal to sell the company mobile phones at a total selling price of P125,000 for 100,000 units. Camilla has the following cost associated the production of 100,000 mobile phones: Direct materials P 46,500 Direct labor 43,500 Manufacturing overhead 60,000 Total P150,000 Manufacturing overhead includes P24,000 of costs that will be eliminated if the mobile phones are no longer produced by Camilla . What is the incremental cost or savings if the mobile phones are bought instead of made?
James Company makes flanges for its main product of widgets. The cost of making each widget is as follows: Another company has offered to sell to James Company the flanges for a price of $19.00 each. Should James Company buy the flanges from the other company or continue to make the flanges themselves? Show your computations.
Crane Company uses 9000 units of Part A in producing its products. A supplier offers to make Part A for $5. CraneCompany has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the relevant cost of buying Part A from the supplier is $72000. $45000. $27000. $0.