Please do the question in the image b. Assume that management at Latex Corporation prepared thefollowing cost estimates for the manufacture of a subassemblycomponent based on an annual production of 8000 units:Direct materialsDirect labourVariable labourFixed overhead applied (150%direct labour cost)TotalPer Unit$ 10881238Total$80,00064,00064,00096,000304.000The supplier has offered the subassembly at a price of $32each. Two thirds of fixed factory overhead, whichrepresents executive salaries, rent, depreciation, and taxes,continue regardless of the decision.QuestionAs the Management Accountant at this company advisemanagement whether the company should buy or make theproduct. Give two (2) reasons to support your decision.Answer with calculation

To determine whether Latex Corporation should make or buy the subassembly component, we need to…

Answered: b. Assume that management at Latex…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...

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Assume a firm has prepared the following cost estimates for the manufacture of a sub-assembly component based on an annual production of 8000 units: Per Unit (Rs) Total (Rs) Direct Materials 5 40,000 Direct Labour 4 32000 Variable Overhead Applied 4 32000 Fixed Overhead Applied(150% of direct labour cost 6 48000 Total cost 19 152000 The supplier has offered the sub-assembly at a price of $16 each. Two-thirds of fixed factory overhead, which represents executive salaries, rent, depreciation, and taxes, continue regardless of the decision. Should the company buy or make the product?
Queens Ltd makes four components A, B, C and D and the associated annual costs are as follows: Production volume (units) Unit variable costs Direct materials Direct labour Variable production overheads Total Fixed costs directly attributable are: The unit prices of an external supplier are: a) A and C b) B and C c) D only A B C D 1,500 3,000 5,0007,000 $ $ d) A only 8 2 14 3,000 12 4 8 1 Which of these components should be bought in from the external supplier: $ $ 5 5 6 6 4 5 13 15 16 6,000 10,000 7,000 16 20 24
Which of the following would be an acceptable measure of activity for a material handling activity cost pool? Multiple Choice о No Number of material moves Yes Multiple Choice No Yes $28.21 per machine-hour $31.75 per machine-hour Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 46,000 machine-hours. The estimated variable manufacturing overhead was $4.54 per machine-hour and the estimated total fixed manufacturing overhead was $1,297,660. The predetermined overhead rate for the recently completed year was closest to: $4.54 per machine-hour Yes $32.75 per machine-hour Weight of material moved Yes No No
Moratti Inc. has computed the following unit costs for the year just ended: • Direct material used • Direct labor • Variable manufacturing overhead • Fixed manufacturing overhead • Variable selling and administrative cost • Fixed selling and administrative cost $15 21 28 32 13 18 Under absorption costing, the product cost per unit will be: О а. 64$ O b. 96$ О с. 77$ O d. 127$
Sheddon Industries produces two products. The products' Identified costs are as follows: Direct materials Direct labor Multiple Choice The company's overhead costs of $54,000 are allocated based on labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What amount of production costs would be assigned to Product A? Note: Do not round Intermediate calculations. $39,000 $50,000 $93,000 Product A $ 20,000 12,000 None of the answers are correct. Product B $ 15,000 24,000
A company’s current cost information relating to its production is shown in the table below: Per Unit Sales price $ 43 Direct material $ 7 Direct labor $ 6 Variable overhead $ 4 Fixed overhead $ 4 The company has been approached by a customer with a request for a 200-unit special order. What is the minimum per unit sales price that management would accept for this order, assuming the company has sufficient excess capacity?
Muscat Pharmacy had sales of OMR 1,000,000 (50,000 units) for 2019. The variable expenses were OMR 600,000 and fixed expenses were OMR 300,000. What is the contribution margin per unit?
A product ‘Riddle’ is manufactured by two distinct processes, namely: Process 1 and Process 2. During the month of March 2020, the following information was obtained with respect to this product. Process 1 Direct Material 1,000 kg at RM25 per kg Direct Expenses RM24,000 Direct Labour RM15,000 Additional information: (i) Overhead is absorbed by the process on a basis of direct labour cost rate of 70%. (ii) Actual output is 950kg. Process 2 Direct Material 600 kg at RM50 per kg Direct Expenses RM12,000 Direct Labour RM10,000 Additional information: (i) Overhead is absorbed by the process on a basis of direct labour cost rate of 40%. (ii) Actual output is 1,350 kg. Normal loss is estimated at 10% of total input for each process. All losses can be sold at RM2 per kg. Required to prepare the following: Process 1 account.…
The following standard costs pertain to a component part manufactured by Ashby Company:Direct materials$2Direct labour5Manufacturing overhead 20 Standard cost per unit $27The company can purchase the part from an outside supplier for $25 per unit. The manufacturing overhead is 60% fixed and this fixed portion would not be affected by this decision. Assume that direct labour is an avoidable cost in this decision. What is the relevant amount of the standard cost per unit to be considered in a decision of whether to make the part internally or buy it from the external supplier?
Assume a company is considering using available space to make 10,000 units of a component part that it has been buying from a supplier for a price of $40.25 per unit. The company’s accounting system estimates the following costs of making the part: Per Unit 10,000 Unitsper Year Direct materials $ 16 $ 160,000 Direct labor 12 120,000 Variable manufacturing overhead 2 20,000 Fixed manufacturing overhead, traceable 8 80,000 Fixed manufacturing overhead, allocated 4 40,000 Total cost $ 44 $ 420,000 One-half of the traceable fixed manufacturing overhead relates to a supervisor that would have to be hired to oversee production of the part. The remainder of the traceable fixed manufacturing overhead relates to depreciation of equipment that the company already owns. This equipment has 20,000 units of unused capacity, no resale value, and it does wear out through use. The allocated fixed…
Crane Company produces 5000 units of part A12E. The following costs were incurred at that level of production: Direct materials Direct labor Variable overhead Fixed overhead $51000 150000 O $(39000). O $(98000). O $74000. O $129000. 76000 187000 If Crane buys the part from an outside supplier, $59000 of the fixed overhead is avoidable. If the outside supplier offers a unit price of $75, net income will increase (decrease) by
The standard and actual cost data of M/s. ABC Company are as follows:Standard Raw Material (DM) is 5000 units @ Rs. 10 while Actual 4900 units @ Rs. 8Standard Direct Labor (DL) is 10000 hours @ Rs. 4 while Actual 12000 Hours @ Rs. 5Standard Factory Overhead (FOH) is 50% of Direct Labor while Actual FOH Rs. 15000Required:A) Calculate;i. Material Price Variance and Material Quantity Varianceii. Labor rate variance and Labor time varianceiii. Overhead VarianceB) Give journal entries to record the above information and close the variance accounts.

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