Current Attempt in ProgressBonita Industries produces 5000 units of part A12E. The following costs were incurred for that level of production:Direct materialsDirect laborVariableoverheadFixed overhead$(15000).$145000.$60000O $85000.O $(60000).16500080000If Bonita buys the part from an outside supplier, $45000 of the fixed overhead is avoidable.If the outside supplier offers a unit price of $73, net income will increase (decrease) by175000

If the total cost increases , then consequently Net Income decreases.If the total cost decreases ,…

Answered: Current Attempt in Progress Bonita…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Sheridan Company produces 5000 units of part A12E. The following costs were incurred for that level of production: Direct materials $ 65000 Direct labor 170000 Variable overhead 85000 Fixed overhead 175000 If Sheridan buys the part from an outside supplier, $30000 of the fixed overhead is avoidable.What is the relevant cost per unit of part A12E? $99 $70 $93 $64
Crane Company produces 5000 units of part A12E. The following costs were incurred at that level of production: Direct materials Direct labor Variable overhead Fixed overhead $51000 150000 O $(39000). O $(98000). O $74000. O $129000. 76000 187000 If Crane buys the part from an outside supplier, $59000 of the fixed overhead is avoidable. If the outside supplier offers a unit price of $75, net income will increase (decrease) by
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, Inc. can produce 100 units of a component part with the following costs: Direct Materials Direct Labour Variable Overhead Fixed Overhead $29000 Make and save $5800. Buy and save $13500. Make and save $1700. Buy and save $1700. 13200 32100 22900 If Coronado Inc. can purchase the component externally for $87800 and only $7700 of the fixed costs can be avoided, what is the correct "make-or-buy decision"?
Ragemark Company produces 15,000 units of a component used in freezer. An outside supplier has offered to supply the part for $1.42. The unit cost is: Direct material $0.55 Direct labour 0.2 Variable overhead 0.1 Fixed overhead 2.45 Total unit cost $3.30 Required: 1. What are the alternatives for Ragemark Company? 2. Assume that none of the ﬁxed cost is avoidable. List the relevant cost(s) of internal production and of external purchase. 3. Which alternative is more cost effective and by how much?
The B Company produces a part that is used in the final assembly of its main follows: Operation1 Operation 2 Materials P240,000 180,000 Direct labor P180,000 Variable overhead 100,000 100,000 Fixed overhead (allocated) 120,000 60,000 Operation 1 can be eliminated if these parts are purchased from an outside vendor. The vendor will supply 400,000 units a year at P2.00 per unit. These parts would still have to be processed through Operation 2. The B Company would have to pay freight charges of P20,000 a year on the purchased parts. If Operation 1 is eliminated, the space can be rented for P25,000 per year. REQUIRED: 1. Should the company purchase the parts or continue making them internally? Use the total approach first. Then use the incremental analysis next.
Oriole, Inc. can produce 100 units of a component part with the following costs: Direct Materials Direct Labour Variable Overhead Fixed Overhead $30100 Buy and save $12500. O Make and save $4700. O Buy and save $1000. Make and save $1000. 13200 31700 21300 If Oriole Inc. can purchase the component externally for $87500 and only $7800 of the fixed costs can be avoided, what is the correct "make-or-buy decision"?
Omega Corporation currently manufactures a component for its main product. The costs per unit are as follows: Sh. Direct materials 1.00 Direct labor 10.00 Variable overhead 5.00 Fixed overhead 8.00 Total 24.00 Zed Company has contacted Omega Company with an offer to sell them 5,000 of the components for sh. 22 each. Omega Company will eliminate sh. 25,000 of the fixed overhead if it accepts the order. should Omega company make or buy the component: . Select one: A. Make and save sh.5,000 B. Buy and save…
Pia Manufacturing Company has developed the following overhead cost formulas: (refer to image) Based on these cost formulas. The total overhead cost expected if 200 machine hours are worked is: Cost Formula Depreciation P500 Set up P400 plus PO.20 per machine-hour P50 plus PO.25 per machine-hour PO.40 per machine-hour Lubrication Utilities a. P620 b. P900 c. P170 d. P1,120
W.T. Ginsburg Engine Company manufactures part ACT31107 used several of its engine models. Monthly production costs for 1,010 units are as follows: Direct materials Direct labor $46,000 11,500 Variable overhead costs 32,500 Fixed overhead costs 23,000 Total costs $113,000 is estimated that 10% of the fixed overhead costs assigned to ACT31107 will no longer be incurred if the company purchases ACT31107 from the outside supplier. W.T. Ginsburg Engine Company has the option of purchasing the part from an outside supplier at $96.75 per unit. W.T. Ginsburg Engine Company purchases 1,010 ACT31107 parts from the outside supplier per month, then its monthly operating income will (Round any intermediary calculations and your final answer to the nearest cent.) OA increase by $21,518 OB decrease by $5.418 OC. increase by $5,418 OD. decrease by $21,518 O Time Remaining: 02:15:58 Next 老 ) %23 20 8. 9 ఉతం W Y U R. S4
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)
Jensen Corporation produces a part for use in the production of one of its products. The per-unit costs associated with the annual production of 1,000 units of this part are as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total costs $5.25 $12.00 $2.75 $6.00 $26.00 $2,500 of the fixed factory overhead costs associated with the production of this product are common fixed costs. Wells Company has offered to sell 1,000 units of the same part to Jensen Corporation for $21 per unit. Jensen should: Select one: O a. Buy the part, because this would save the company $5.00 per unit. O b. Make the part, because this would save the company $1.00 per unit. O c. Make the part, because this would save the company $2,500 annually. O d. Buy the part, because this would save the company $2,500 annually.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS