Manufacturing cycle times, relevant revenues, and relevant costs. The DJ Corporation makes custom specified wire harnesses for the trucking industry only upon receiving firm orders from its custom- ers. DJ has recently purchased a new machine to make two types of wire harnesses, one for Peterbilt and the other for Kenworth. The annual capacity of the new machine is 5,000 hours. The following information is available for next year: Selling Price per Order If Average Manufacturing Cycle Time per Order Is Less Than Inventory Carrying Annual Average Number of Variable Cost per Order per Hour Manufacturing Time Required 40 hours 50 hours More Than Cost per Order Customer 200 Hours 200 Hours Orders 100 10 $14,000 12,500 $13,400 11,960 $9,000 8,000 Peterbilt $0.50 Kenworth 0.45

Manufacturing cycle times, relevant revenues, and relevant costs. The DJ Corporation makes custom specified wire harnesses for the trucking industry only upon receiving firm orders from its custom- ers. DJ has recently purchased a new machine to make two types of wire harnesses, one for Peterbilt and the other for Kenworth. The annual capacity of the new machine is 5,000 hours. The following information is available for next year: Selling Price per Order If Average Manufacturing Cycle Time per Order Is Less Than Inventory Carrying Annual Average Number of Variable Cost per Order per Hour Manufacturing Time Required 40 hours 50 hours More Than Cost per Order Customer 200 Hours 200 Hours Orders 100 10 $14,000 12,500 $13,400 11,960 $9,000 8,000 Peterbilt $0.50 Kenworth 0.45

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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Company XYZ is conducting an engineering economic analysis to decide whether to make vs purchase position for a necessary element needed ins several products. Now the engineering department has established this information: Option A to purchase 10,000 units annually at a fixed price of $8.50 per unit. The cost of placing the order is insignificant as per the present cost accounting procedure. Option B to manufacture 10,000 units annually with a direct labor cost of $1.50 per unit, manufacturing overhead cost is allotted at 200% of direct labor (which is $3.00 per unit) ) and Direct materials cost at $5.00 per unit. Based on the information, should the unit be purchased or manufactured?
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Mostera manufactures two components A & B. There are to be 5000 of each component manufactured next year. The following information is available for each unit of A&B. Machine Hrs Variable CostUnit of A 4 25Unit of B 6 34 A total of 30,000 machine hours are available.A sub-contractor is willing to supply Monstera with units of A & B for P27 and P38 respectively. Advise Monstera whether to make or buy.
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A company is currently using a supplier to make required components. The supplier changes an annual setup cost of $5,000 regardless of the number of parts the company purchases in a single year. In addition to this annual setup fee, the supplier uses the following pricing scheme: # of units $/unit 1-100 $1,000 each 101 - 500 $800 each 501 - 750 $600 each 751 or more $500 each The company is now exploring the possibility of producing the same component in-house. The company expects to need more than 750 units per year for the next 5 years. The following information describes their in-house production solution: The annual Capital Recover & Return for the needed equipment $300,000 per year Material Cost per unit = $250 Annual Operation and Maintenance Costs = $100,000 Annual Labor Costs = $150,000 Annual Overhead Costs = $50,000 Question: (True or False) If the annual number of units ordered per year is greater than 750, the $ cost per unit for the items purchased from THE SUPPLIER is:…
A company is currently using a supplier to make required components. The supplier changes an annual setup cost of $5,000 regardless of the number of parts the company purchases in a single year. In addition to this annual setup fee, the supplier uses the following pricing scheme: # of units $/unit 1- 100 $1,000 each 101 - 500 $800 each 501 - 750 $600 each 751 or more $500 each The company is now exploring the possibility of producing the same component in-house. The company expects to need more than 750 units per year for the next 5 years. The following information describes their in-house production solution: The annual Capital Recover & Return for the needed equipment = $300,000 per year Material Cost per unit = $250 Annual Operation and Maintenance Costs = $100,000 Annual Labor Costs = $150,000 Annual Overhead Costs = $50,000 Question: What is the Breakeven Quantity for this Make / Buy Decision?
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