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
Q: A business is operating at 90% capacity and is currently purchasing a part which is being used in…
A: Number of units required = 30,000 Cost of purchasing per unit = 15 Variable cost of manufacturing…
Q: Colt Company owns a machine that can produce two specialized products. Production time for Product…
A: The contribution margin or dollar contribution per unit is computed by subtracting the variable cost…
Q: Chang Industries has 1,500 defective units of product that already cost $44 each to produce. A…
A: Period cost means which are not directly included in the process of production. General and…
Q: Colt Company owns a machine that can produce two specialized products. Production time for Product…
A: PARTICULARS PRODUCT TLX PRODUCT MTV CONTRIBUTION MARGIN PER UNIT $ 9.1 $ 3.12 UNITS PRODUCED…
Q: What is the net advantage (disadvantage) of purchasing the part rather than making it? Ahringer…
A: Answer- P 20,000 Working Making Cost per unit Direct Material 19.10 Direct Labour…
Q: An outside supplier has offered Z Inc. to supply 8,000 units at a total cost of $96,000. If Z Inc.…
A: The income which is earned directly from the regular business operation is known as operating…
Q: company can buy the part from an outside supplier for $2 per unit and avoid 20% of the fixed…
A:
Q: Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of…
A: Operating Income refers to the amount of profit earned from the business operations and deducting…
Q: Stufful Corporation currently manufactures a subassembly for its main product. The costs per unit…
A: Whenever business has more than one alternative, it should choose that alternative which has maximum…
Q: ABC Company manufactures Part AA for use in its production cycle. The costs per unit for 25,000…
A: Relevant cost to Make Amount (in P) Direct materials (25,000 units X P 7.50 per unit)…
Q: ne Hinges Division of Altoona Corporation sells 118,000 units of part Z-25 to the outside market.…
A: Solution Given Capacity of production of Z-25 195000 Sales to outside market 118000…
Q: Pumpkin Company needs 20,000 units of a certain part to use in one of its products. The following…
A: Variable cost means the cost which vary with the level of output and fixed cost means the cost which…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Total variable cost = direct material + direct labor + variable MOH + Variable selling costs…
Q: related to making this part are $89,000 per year, and allocated fixed costs are $76,000 per year.…
A: Incremental analysis is a tool used in managerial accounting when choosing between alternative…
Q: A company currently pays $5 per unit to buy a key part for a product it manufactures. It can make…
A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Variable costs: These costs are incurred in conjunction to the volume of goods produced or sold. It…
Q: Luca Inc. has received a special order for 2,000 units of its product at a special price of $75. The…
A: Management accounting is widely used by managers to determine the differential costs of the product…
Q: Colt Company owns a machine that can produce two specialized products. Production time for Product…
A: Formula: Contribution margin = Selling price per unit - variable price per unit
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Total variable cost = direct material + direct labor + variable MOH + Variable selling costs…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Incremental Cost:-It is an increased difference producing two different types of units, like the…
Q: Thornton Industries has 2,700 defective units of product that already cost $28 each to produce. A…
A: Sunk cost: Sunk costs are those costs which an entity has already incurred and cannot be recovered.…
Q: Paradise Manufacturing currently makes one of its parts for a total cost of $3.80 per unit. This…
A: The decision to buy or manufactures depend on the manufacturing cost associated to desired part…
Q: Regis Company makes the plugs it uses in one of its products at a cost of P36 per unit. This cost…
A: Variable cost per unit = Total costs - fixed overhead = P36 - 8 = P28 per unit
Q: Colt Company owns a machine that can produce two specialized products. Production time for Product…
A: The hourly contribution is calculated below, TLX gives the higher hourly contribution as compared…
Q: Jen Company manufactures 20,000 units of part S1 each year for use on its production line. The cost…
A: The make or buy decision is taken by analysing various factors such as cost of manufacturing the…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Incremental Cost:-It is an increased difference producing two different types of units, like the…
Q: Helix Company has been approached by a new customer to provide 2,000 units of its regular product at…
A: Sales revenue: It is the revenue earned by a business on selling the goods and services to the…
Q: Road master shocks has 15000 units of a defective product on hand that costs $80,000 to manufacture.…
A: In the given case there are two options where the company can either sell it as scrap or sell it…
Q: Robinson Computers makes 5,700 units of a circuit board, CB76, unit is $180 and fixed cost per unit…
A: Old machine =6800 Annual operating costs =18000 Life = 5years New machine =8800 Life =5 years…
Q: Concord Corporation can produce 100 units of a necessary component part with the following costs:…
A: Make or buy decision is taken by the managers to chose the better option amongst the two; that is to…
Q: Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total…
A: Fixed cost remain fixed whatever may be the level of output where as variable cost will vary with…
Q: Bright Limited is considering whether or not to accept a special contract to supply 2,000 identical…
A: Solution The relevant cost are those which cost which increases / decreases the total cost of…
Q: A business is operating at 90% capacity and is currently purchasing a part which is being used in…
A: Given information, A business is operating at 90% capacity Purchase cost = P15 Manufacturing cost…
Q: Sage Company is operating at 90% of capacity and is currently purchasing a part used in its…
A: Differential analysis (also called incremental analysis) is a management accounting technique in…
Q: mpany currently manufactures 52,000 units per year of a key compa er unit, fixed costs related to…
A: Incremental cost refers to the total expenses involved in order to produce an extra unit of a…
Q: urin Ltd has been asked to give a quote for making a large piece of earth-moving equipment. The…
A: A relevant cost is a cost that only relates to a specific management decision, and which will change…
Q: Diskmar has received a special order for 2,000 units of its product at a special price of $75. The…
A: Formulas:
Q: RYX Manufacturing Company uses 1,000 units of Chip annually in its production. Order costs consist…
A: EOQ or Economic Order Quantity is the order quantity that is ideal for a company to maintain with…
Q: Colt Company owns a machine that can produce two specialized products. Production time for Product…
A: working note: The Contribution per unit Will be $8.05 $2.76 Product TLX =…
Q: A company is producing a product for selling price of $1000, while incurs the following costs:…
A: The variable cost varies according to the number of units produced. Regardless of the number of…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Fixed cost remains constant at all levels of production. Only variable cost is taken for the…
Q: Sage Company is operating at 90% of capacity and is currently purchasing a part used in its…
A: Sage company is operating at 90% of capacity Currently, a part is purchasing which is used in…
Q: Kobe Company has manufactured 200 partially finished cabinets at a cost of $102,000. These can be…
A: Incremental income = Incremental Sales revenue – Incremental costs
Q: Sage Company is operating at 90% of capacity and is currently purchasing a part used in its…
A: Formulas: Differential cost = Units*(Manufacturing cost - Variable cost of making)
Q: Juanita Company must decide whether to make or buy some of its components for the appliances it…
A: Incremental analysis: Incremental analysis is a schedule prepared to determine the total cost of…
Q: Colt Company owns a machine that can produce two specialized products. Production time for Product…
A: Lets understand the basics. When there is any constrain to fulfill the needs of customer then…
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- Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided, If Reuben accepts the offer, what will the effect on profit be?Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $2 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price that Zena should accept for this special order?Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
- Vaughn Manufacturing has the following costs when producing 100000 units: Variable costs $600000 Fixed costs 900000 An outside supplier has offered to make the item at $4.50 a unit. If the decision is made to purchase the item outside, current production facilities could be leased to another company for $167000. The net increase (decrease) in the net income of accepting the supplier's offer is O $317000. O $(17000). O $832000. O $283000.Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $160,000, which includes fixed costs of $90,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.30 per unit and avoid 30% of the fixed costs. If the company makes the part, how much will its operating income be? O A. $135,000 greater than if the company bought the part O B. $101,000 greater than if the company bought the part O C. $101,000 less than if the company bought the part O D. $135,000 less than if the company bought the partNoblesya Co. produces 1,000 parts per year, which are used in the assembly of one ofits products. The unit product cost of these parts are: Variable manufacturing cost,P12.00; fixed manufacturing cost, P9.00. The part can be purchased from an outsidesupplier at P20.00. If the part is purchased from the outside supplier, two thirds of thefixed manufacturing costs can be eliminated. What would be the annual impact on thecompany’s net operating income as a result of buying the part from the outside supplier? provide solution
- 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?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 $6.20 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 $ 756,000 $ 1,036,150 Variable cost per switch 2.00 0.90 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 255,000 switches per year and what is the total cost of that alternative?Value Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 32,000 parts is $90,000, which includes fixed costs of $30,000 and variable costs of $60,000. The company can buy this part from an external supplier for $5 per unit and avoid 10% of the fixed costs. If Value Electronics decides to outsource the production of the part, how will it impact its operating income? A. Operating income increases by $97,000. B. Operating income decreases by $100,000. C. Operating income decreases by $97,000. D. Operating income increases by $100,000.
- Suko Na Ba Co. produces cellular phone cases. Each case requires a keypad which it also manufactures at a cost of P20 per unit, inclusive of fixed overhead cost of P5. Suko Na Ba Co. needs 50,000 units of this keypad annually. A supplier, Hindi Pa Co. has offered to sell to Suko Na Ba Corporation its keypad requirements at P24 per unit. If Suko Na Ba decides to buy the keypads, P2 per unit of the fixed overhead based on the annual estimate could be eliminated, and the facility previously used to produce the key pad could be rented to another company.If Suko Na Ba Co. outsource the keypads but does not rent the unused facility, it would __?Baird Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. $ 6,500 6,400 4,100 9,600 27,900 Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Baird for $2.60 each. Required a. Calculate the total relevant cost. Should Baird continue to make the containers? b. Baird could lease the space it currently uses in the manufacturing process. If leasing would produce $11,200 per month, calculate the total avoidable costs. Should Baird continue to make the containers? a. Total relevant cost Should Baird continue to make the containers? b. Total avoidable cost Should Baird continue to make the containers?Ancinas Company produces printers and uses a standard part in the manufacture of several of its printers. The cost of producing 43,000 parts is $280,000, which includes fixed costs of $136,000 and variable costs of $144,000. The company can buy the part from an outside supplier for $5.00 per unit, and avoid 30% of the fixed costs. If Ancinas Company makes the part, how much will its operating income be? $30,200 less than if the company bought the part. $30,200 greater than if the company bought the part. $65,000 greater than if the company bought the part. $65,000 less than if the company bought the part.