TB MC Qu. 13-54 (Static) Sardi Incorporated is considering whether to continue...Sardi Incorporated is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 17,000 of the componentseach year. The unit product cost of the component according to the company's cost accounting system is given as follows:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadUnit product costAssume that direct labor is a variable cost. Of the fixed manufacturing overhead, 70% is avoidable if the component were bought from the outside supplier. Inaddition, making the component uses 2 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up foruse on another product that requires 4 minutes on this machine and that has a contribution margin of $7.00 per unit.When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component?Note: Round your intermediate calculations to 2 decimal places.Multiple Choice$24.21 per unit$ 8.208.301.204.30$ 22.00$25.50 per unit$20.71 per unit

Manufacturing costs are an important aspect of defining a company's total cost structure. Businesses…

Sardi Incorporated is considering whether to continue to make a component or to buy it from a each year. The unit product cost of the component according to the company's cost accounting Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 8.20 8.30 1.20 4.30 $ 22.00 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 70% is avoidal addition, making the component uses 2 minutes on the machine that is the company's current

Sardi Incorporated is considering whether to continue to make a component or to buy it from a each year. The unit product cost of the component according to the company's cost accounting Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 8.20 8.30 1.20 4.30 $ 22.00 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 70% is avoidal addition, making the component uses 2 minutes on the machine that is the company's current

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter2: Accounting For Materials

Section: Chapter Questions

Problem 17E: Davis Co. uses backflush costing to account for its manufacturing costs. The trigger points are the...

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The following product costs are available for Stellis Company on the production of erasers: direct materials, $22,000; direct labor, $35,000; manufacturing overhead, $17,500; selling expenses, $17,600; and administrative expenses; $13,400. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 13,750 equivalent units are produced, what is the equivalent material cost per unit? If 17,500 equivalent units are produced, what is the equivalent conversion cost per unit?
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