Current-Control Inc. manufactures a variety of electrical switches. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a switch to Current-Control for $32 per unit. To evaluate this offer, Current-Control has gathered the following information relating to its own cost of producing the switch internally: Per 12,000 Units Unit per Year $144,000 120,000 36,000 96,000 192,000 Direct materials $12 Direct labour 10 Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, common, but allocated 3 8* 16 Total cost $49 $588,000 *25% supervisory salaries; 75% depreciation of special equipment (no resale value). Required: 1-a. Assuming that the company has no alternative use for the facilities now being used to produce the switch, compute the total cost of making and buying the parts. Make Buy Total cost (12,000 units)

Current-Control Inc. manufactures a variety of electrical switches. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a switch to Current-Control for $32 per unit. To evaluate this offer, Current-Control has gathered the following information relating to its own cost of producing the switch internally: Per 12,000 Units Unit per Year $144,000 120,000 36,000 96,000 192,000 Direct materials $12 Direct labour 10 Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, common, but allocated 3 8* 16 Total cost $49 $588,000 *25% supervisory salaries; 75% depreciation of special equipment (no resale value). Required: 1-a. Assuming that the company has no alternative use for the facilities now being used to produce the switch, compute the total cost of making and buying the parts. Make Buy Total cost (12,000 units)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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