Total costs             $30.00 (a)   Given the information above, if the company buys the component, it would however have to pay $17.00, but would still have to meet its fixed cost. Should the company make or buy the component?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter5: Process Costing
Section: Chapter Questions
Problem 1PB: The following product costs are available for Stellis Company on the production of erasers: direct...
icon
Related questions
icon
Concept explainers
Topic Video
Question
  1. The internal manufacturing cost per unit of a component is as follows – 

Direct Material        $5.00

Direct Labour        $10.00

Fixed costs            $15.00

Total costs             $30.00

(a)   Given the information above, if the company buys the component, it would however have to pay $17.00, but would still have to meet its fixed cost. Should the company make or buy the component?

 

(b)  Based on your answer in (a) above name two factors that can influence the company to buy the product.

 

2.   (a) Describe two (2) methods for allocating support costs to departments.

      (b) Explain why support costs are allocated to departments.

 

Please answer question 2 thank you very much.

Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Essentials of Business Analytics (MindTap Course …
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning