A B Question 2 - Special Order C D E F ΕΠΙ G Marks 10 I Johnson Motors manufactured 500 gears that are used in its motors and incurred the following costs: Direct materials Direct labour Variable manufacturing overhea Fixed manufacturing overhead $50,000 19,000 30,000 20,000 A supplier has offered to sell the gears to Johnson for $200 each. The fixed manufacturing overhead consists mainly of depreciation on the equipment used to manufacture the part and would not be reduced if the gears were purchased from the outside firm. If the gears are purchased from the supplier, Johnson has the opportunity to use the factory equipment to produce another product, which is estimated to have a contribution margin of $3,000. Instructions Prepare a report for Johnson Motors that can be used to assist in the make-or-buy decision. K L

Help Save Recher Corporation uses part Q89 In one of Its products. The company's Accounting Department reports the following costs of producing the 7,100 units of the part that are needed every year. Par Unit $ 7.50 $ 4.10 $ 8.00 $ 3.00 $ 2.50 $ 1.30 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 $26.00 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 $3,200 of these allocated general overhead costs would be avoided. In addition, the space used to produce part Q89 could be used to make more of one of the…

uestion 8 M&S Company incurs the following costs to produce 10,000 units of a subassembly part: ot yet swered Direct materials OMR 0.84 arked out of Direct labor 1.125 00 Variable overhead 1.26 Flag question Fixed overhead 1.62 An outside supplier has offered to sell M&S Company the subcomponent for OMR 2.85 a unit. If M&S Company accepts the offer, by how much will net income increase (decrease)? Select one: Oa. None of the answers are correct Ob. OMR (8,850) Oc. OMR 19,950 O d. OMR 3,750 Oe. OMR (2,850)

Coronado Industries incurs the following costs to produce 9100 units of a subcomponent: Direct materials $7644 Direct labor 10283 Variable overhead 11466 Fixed overhead 16200 An outside supplier has offered to sell Coronado the subcomponent for $2.85 a unit.If Coronado could avoid $3000 of fixed overhead by accepting the offer, net income would increase (decrease) by $(1724). $6458. $458. $(5639).

Sheffield Corp. incurs the following costs to produce 12800 units of a subcomponent: Direct materials $10752 Direct labor 14464 Variable overhead 16128 Fixed overhead 16200 An outside supplier has offered to sell Sheffield the subcomponent for $2.85 a unit. No fixed overhead costs are avoidable.If Sheffield accepts the offer, by how much will net income increase (decrease)? $(3712) $4864 $21064 $(11264)

Marigold Corp. incurs the following costs to produce 12200 units of a subcomponent: Direct materials $10248 Direct labor 13786 Variable overhead 15372 Fixed overhead 16200 An outside supplier has offered to sell Marigold the subcomponent for $2.85 a unit. No fixed overhead costs are avoidable.If Marigold accepts the offer, by how much will net income increase (decrease)? $(3538) $20836 $4636 $(10736)

The following standard costs pertain to a component part manufactured by Ashby Company:Direct materials$2Direct labour5Manufacturing overhead 20 Standard cost per unit $27The company can purchase the part from an outside supplier for $25 per unit. The manufacturing overhead is 60% fixed and this fixed portion would not be affected by this decision. Assume that direct labour is an avoidable cost in this decision. What is the relevant amount of the standard cost per unit to be considered in a decision of whether to make the part internally or buy it from the external supplier?

Coronado Industries incurs the following costs to produce 8600 units of a subcomponent: $7224 Direct materials 9718 Direct labor Variable overhead 10836 Fixed overhead 16200 An outside supplier has offered to sell Coronado the subcomponent for $2.85 a unit. If Coronado accepts the offer, by how much will net income increase (decrease)? o $(2494) O $3268 $(7568) O $19468 4)

Direct materials $ 15 $ 330,000 Direct labor 8 176,000 Variable manufacturing overhead 3 66,000 Fixed manufacturing overhead, traceable 3* 66,000 Fixed manufacturing overhead, allocated 6 132,000 Total cost $ 35 $ 770,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value).   Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 22,000 carburetors from the outside supplier? 2. Should the outside supplier’s offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $220,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 22,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3,…

Division X of Bella Corporation sells Part A to other companies for $87.20 per unit. According to the company's accounting system, the costs to Division X to make a unit of Part A are: O $87.20 per unit O $62.60 per unit O $58.10 per unit O $79.95 per unit O None of the above Direct materials Direct labor $5.80 Variable Division Y of Bella Corporation uses a part much like Part A in one of its products. Division Y can buy this part from an outside supplier for $79.95 per unit. However, Division Y could use Part A instead of the part it purchases from the outside supplier. What is the most Division Y would be willing to pay the Division X for Part A? Question 21 $42.70 manufacturing $9.60 overhead Fixed manufacturing $4.50 overhead