| Variable costs to make | 15 | |
| Add: Avoidable fixed cost | 3 | =8-5 |
| Total relevant cost to make | 18 | |
| Total relevant cost to make | 18 | |
| Less: Cost to buy | 17 | |
| Savings in cost per unit | 1 | |
| Total savings | 5300 | |
| Buy; Savings = $5300 | ||
| Option 4 is correct |
Swifty Corporation currently manufactures a wicket as its main product. The costs per unit are as...
Coronado Industries currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $14 Variable overhead 5 Fixed overhead 8 Total $27 Saran Company has contacted Coronado with an offer to sell it 6300 of the wickets for $21 each. If Coronado makes the wickets, variable costs are $19 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Coronado make or buy the wickets? Make;...
Multiple Choice Question 91 Sheridan Company currently manufactures a wicket as its main product. The costs per unit are as follows: $9 Direct materials and direct labor Variable overhead Fixed overhead Total $22 Saran Company has contacted Sheridan with an offer to sell it 3300 of the wickets for $16 each. If Sheridan makes the wickets, variable costs are $14 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Sheridan make or buy the...
Multiple Choice Question 91 Waterway, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $16 Variable overhead Fixed overhead 8 $29 Total Saran Company has contacted Waterway with an offer to sell it 4700 of the wickets for $23 each. If Waterway makes the wickets, variable costs are $21 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoi dable. Should Waterway make or...
Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $54.00 Direct labor 35.00 Variable overhead 40.00 Fixed overhead 34.00 Total $163.00 Crayola Technologies Inc. has contacted Rubium with an offer to sell 6,000 of the subassemblies for $144.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives? Make; savings =...
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Sage Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials Direct labour Variable overhead Fixed overhead Total $ 3.70 27.80 14.10 26.10 $71.70 Regina Corp. has contacted Sage with an offer to sell it 5,100 subassemblies for $52.10 each. Your answer is correct. Should Sage make or buy the subassemblies? Create a schedule that shows the total quantitative differences between the two alternatives. (Round all entries to 2 decimal places, e.g....
Goof-E Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $3.40 Direct labour $29.80 Variable overhead $16.10 Fixed overhead $25.20 Total costs $74.50 Mouse Corp. has contacted Goof-E with an offer to sell it 4,700 subassemblies for $55.20 each. Should Goof-E make or buy the subassemblies? Create a schedule that shows the total quantitative differences between the two alternatives. What are two qualitative things Goof-E should consider when considering this offer?...
Make or Buy Smith Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $ 1 Direct labor 10 Variable overhead 5 Fixed overhead 8 Total $24 Funkhouser Company has contacted Smith with an offer to sell it 5,000 of the subassemblies for $20 each. If Funkhouser makes the subassemblies, $5 of the fixed overhead per unit will be allocated to other products. Required: a. Should Smith make or buy the subassemblies?...
LMK Reach manufactures baby toys as its main product. The costs per unit are as follows: Direct materials $1.00 Direct labor 10.00 Variable overhead 5.00 Fixed overhead 8.00 Total $24.00 Khaleed International has contacted LMK Reach with an offer to sell 4,000 of the toys for $25.00 each. LMK will eliminate $27,000 of fixed overhead if it accepts the proposal. 8. What is the total relevant costs for LMK? 9. Should LMK make or buy the toys? What is the...