Case 5 (2 marks, 7min) Your company produces 1,000 units of a necessary component with the...
Case 5 (2 marks, 7min)
Your company produces 1,000 units of a necessary component with the following costs
|
Direct Materials |
SR24,000 |
|
Direct Labor |
16,000 |
|
Variable Overhead |
4,000 |
|
Fixed Overhead |
7,000 |
The company could avoid SR3,000 in fixed overhead costs and another product couldbe made that would increase profit contribution by SR8,000 if the components wereacquired externally (SR43 per unit). Management decided to manufacture the product to increase net income by SR20,000.
|
Opinion |
|
|
Justification |
|
Homework Answers
Opinion: It is better to manufacture to increase Net Income by SR 20000 because if sourced and sold, the net revenue is increasing only by 3000+8000=11000, which is 3000 in Fixed Cost and 8000 in Contribution Margin.
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Case 5 (2 marks, 7min)
Your company produces 1,000 units of a necessary component with
the...
Crane Company produces 1000 units of a necessary component with the following costs: Direct Materials $24000...
Crane Company produces 1000 units of a necessary component with the following costs: Direct Materials $24000 Direct Labor 5000 Variable Overhead 7000 Fixed Overhead 10000 Crane Company could avoid $6000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Crane Company would accept to acquire the 1000 units externally? $40000 $42000 $36000 $39000
Crane Company produces 1000 units of a necessary component with the following costs: $43000 24000 Direct...
Crane Company produces 1000 units of a necessary component with the following costs: $43000 24000 Direct Materials Direct Labor Variable Overhead Fixed Overhead 12000 10000 Crane Company could avoid $6000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Crane Company would accept to acquire the 1000 units externally? $77000 $83000 $79000 $85000
Bonita Industries produces 1000 units of a necessary component with the following costs: Direct Materials $33000...
Bonita Industries produces 1000 units of a necessary component with the following costs: Direct Materials $33000 Direct Labor 14000 Variable Overhead 12000 Fixed Overhead 10000 Bonita Industries could avoid $6000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Bonita Industries would accept to acquire the 1000 units externally?
Vaughn Manufacturing produces 1000 units of a necessary component with the following costs: $41000 22000 Direct...
Vaughn Manufacturing produces 1000 units of a necessary component with the following costs: $41000 22000 Direct Materials Direct Labor Variable Overhead Fixed Overhead 11000 10000 Vaughn Manufacturing could avoid $6000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Vaughn Manufacturing would accept to acquire the 1000 units externally? $74000 $73000 $78000 $80000
Bramble Corp. produces 1000 units of a necessary component with the following costs: Direct Materials $28000...
Bramble Corp. produces 1000 units of a necessary component with the following costs: Direct Materials $28000 Direct Labor 9000 Variable Overhead 12000 Fixed Overhead 10000 Bramble Corp. could avoid $6000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Bramble Corp. would accept to acquire the 1000 units externally? $47000 $55000 $49000 $53000
Waterway Industries produces 1000 units of a necessary component with the following costs: Direct Materials $42000...
Waterway Industries produces 1000 units of a necessary component with the following costs: Direct Materials $42000 Direct Labor 23000 Variable Overhead 8000 Fixed Overhead 10000 Waterway Industries could avoid $6000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Waterway Industries would accept to acquire the 1000 units externally? a. $75000 b. $79000 c. $77000 d....
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13. Ashley Industries can make 1.000 units of a necessary component with the following costs: Direct...
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Waterway's Shop can make 1000 units of a necessary component with the following costs: Direct Materials...
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19. Marathon Manufacturing Company can make 10,000 units of a necessary component part with the following...
19. Marathon Manufacturing Company can make 10,000 units of a necessary component part with the following costs per unit: Direct Materials $15 Direct Labor Variable Overhead Fixed Overhead Product cost per unit $55 Marathon Manufacturing Company can purchase the component externally for $38 per unit. Only 25% of the total fixed costs can be avoided. What is the correct make-or-buy decision in order to maximize net income? a. Make and save $12,000 6 Buy and save $12,000 C. Make and...
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Vaughn Manufacturing produces 1000 units of a necessary component with the following costs: $41000 22000 Direct Materials Direct Labor Variable Overhead Fixed Overhead 11000 10000 Vaughn Manufacturing could avoid $6000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Vaughn Manufacturing would accept to acquire the 1000 units externally? $74000 $73000 $78000 $80000
13. Ashley Industries can make 1.000 units of a necessary component with the following costs: Direct Materials $144,000 Direct Labor 36.000 Variable Overhead 18.000 Fixed Overhead The company can purchase the 1,000 units externally for $234,000. The avoidable fixed costs are $12,000 if the units are purchased externally. An analysis shows that at this external price, the company is indifferent between making or buying the part. What are the fixed overhead costs of making the component? a $48.000 b. $36,000...
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