Mojo Company has received an offer from a supplier. This supplier wants to provide Part 1337...
Mojo Company has received an offer from a supplier. This supplier wants to provide Part 1337 to Mojo for $15 per unit. Mojo uses 5,200 units monthly.
Mojo currently makes the part. Every month, it costs $50,000 in machinery costs and $25,000 in labor to make Part 1337. Mojo could avoid all of those machinery and labor costs and rent out some unused space if it no longer makes Part 1337 on its own. Rent for unused space is expected to be $3,500 per month.
Which of the following is TRUE, based on relevant cost analysis?
| a.
It is $3,000 MORE profitable to buy than to make. |
|
| b.
It is $500 MORE profitable to buy than to make. |
|
| c.
It is $3,000 LESS profitable to buy than to make. |
|
| d.
It is $500 LESS profitable to buy than to make. |
Homework Answers
Relevant cost
| Make | Buy | |
| Machinery Cost | 50000 | |
| Labor cost | 25000 | |
| Opportunity Cost | 3500 | |
| Purchase cost (5200*15) | 78000 | |
| Total relevant cost | 78500 | 78000 |
So answer is b) It is $500 MORE profitable to buy than to make.
Add Answer to:
Mojo Company has received an offer from a supplier. This
supplier wants to provide Part 1337...
Company currently buys a part from a supplier for $13.55 per unit but is considering making...
Company currently buys a part from a supplier for $13.55 per unit but is considering making the part itself next year. This year, they purchased 3,000 units of this part. Estimated costs to make the part are: Per-Unit Total Direct materials $2.60 $7,800 Direct labor 4.75 14,250 Variable overhead 4.10 12,300 Fixed overhead 4.50 13,500 Total $15.95 $47,850 Of the estimated fixed overhead, $5,130 are common costs that would be allocated to the part; the rest would be additional fixed...
X Company currently buys a part from a supplier for $14.09 per unit but is considering...
X Company currently buys a part from a supplier for $14.09 per unit but is considering making the part itself next year. This year, they purchased 3,400 units of this part.Estimated costs to make the part are: Per-Unit Total Direct materials $3.96 $13,464 Direct labor 3.80 12,920 Variable overhead 4.20 14,280 Fixed overhead 5.30 18,020 Total $17.26 $58,684 Of the estimated fixed overhead, $6,667 are common costs that would be allocated to the part; the rest would be additional fixed...
QUESTION 2 ANGER MGT, P.C. produces ANGER MANAGEMENT SESSIONS and must decide whether to accept a...
QUESTION 2 ANGER MGT, P.C. produces ANGER MANAGEMENT SESSIONS and must decide whether to accept a supplier's offer to sell the firm an essential input: TRAINING MATERIALS. This supplier is willing to s units of TRAINING MATERIALS every month. CurrentlyANGER MGT P C produces TRAINING MATERIALS with its own labor. The workers' salaries are $8,000 per month. Also about $100 of other costs per month are incurred producing the input. If the firm buys the part, the workers' salaries can...
I need number 3 please! X Company currently buys a part from a supplier for $12.41...
I need number 3 please! X Company currently buys a part from a supplier for $12.41 per unit but is considering making the part itself next year. This year, they purchased 3,100 units of this part. Estimated costs to make the part are: Per-Unit Total Direct materials $2.38 $7,378 Direct labor 3.94 12,214 Variable overhead 4.00 12,400 Fixed overhead 5.00 15,500 Total $15.32 $47,492 Of the estimated fixed overhead, $5,735 are common costs that would be allocated to the part;...
roblem 4 (10 points) harp Image Company makes a part used in the manufacture of video...
roblem 4 (10 points) harp Image Company makes a part used in the manufacture of video cameras. Management is considering whether to continue manufacturing the part.or to buy the part from an outside source a cost of $21.30 per part. Sharp Image needs 100,000 parts per year. The cost of manufacturing 100.000 parts is computed as follows: $ 765,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing costs 612,000 510,000 663,000 $2,550,000 Sharp Image would pay...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 43,000 parts is $140,000, which includes fixed costs of 560,000 and variable costs of $71,000 The company can buy the part from an outside Supplier for $3 60 per unit and avoid 30% of the fixed costs Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $143,000, which includes fixed costs of $70,000 and variable costs of $73,000. The company can buy the part from an outside supplier for $3.70 per unit, and avoid 30 % of the fixed costs. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 42,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.50 per unit, and avoid 30% of the fixed costs. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $140,000, which includes forced costs of $72.000 and variable costs of $60,000. The company can buy the part from an outside supplier for $4.00 per unit, and avoid 30% of the food costs Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold...
Question Help Harvey Automobiles uses a standard part in the manufacture of several of its trucks....
Question Help Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $140,000, which includes fued costs of $50,000 and variable costs of $90,000 The company can buy the part from an outside supplier for $3.50 per unit, and avoid 30% of the fixed costs. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be...
QUESTION 2 ANGER MGT, P.C. produces ANGER MANAGEMENT SESSIONS and must decide whether to accept a supplier's offer to sell the firm an essential input: TRAINING MATERIALS. This supplier is willing to s units of TRAINING MATERIALS every month. CurrentlyANGER MGT P C produces TRAINING MATERIALS with its own labor. The workers' salaries are $8,000 per month. Also about $100 of other costs per month are incurred producing the input. If the firm buys the part, the workers' salaries can...
roblem 4 (10 points) harp Image Company makes a part used in the manufacture of video cameras. Management is considering whether to continue manufacturing the part.or to buy the part from an outside source a cost of $21.30 per part. Sharp Image needs 100,000 parts per year. The cost of manufacturing 100.000 parts is computed as follows: $ 765,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing costs 612,000 510,000 663,000 $2,550,000 Sharp Image would pay...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 43,000 parts is $140,000, which includes fixed costs of 560,000 and variable costs of $71,000 The company can buy the part from an outside Supplier for $3 60 per unit and avoid 30% of the fixed costs Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $143,000, which includes fixed costs of $70,000 and variable costs of $73,000. The company can buy the part from an outside supplier for $3.70 per unit, and avoid 30 % of the fixed costs. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $140,000, which includes forced costs of $72.000 and variable costs of $60,000. The company can buy the part from an outside supplier for $4.00 per unit, and avoid 30% of the food costs Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold...
Question Help Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $140,000, which includes fued costs of $50,000 and variable costs of $90,000 The company can buy the part from an outside supplier for $3.50 per unit, and avoid 30% of the fixed costs. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 10 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 10 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 10 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 10 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 10 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 10 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 10 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 10 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 10 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 10 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 10 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 10 months ago