Baird Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 6,500 6,400 4,100 9,600 27,900 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Baird for $2.60 each. Required a. Calculate the total relevant cost. Should Baird continue to make the containers? b. Baird could lease the space it currently uses in the manufacturing process. If leasing would produce $11,200 per month, calculate the total avoidable costs. Should Baird continue to make the containers? a. Total relevant cost Should Baird continue to make the containers? b. Total avoidable cost Should Baird continue to make the containers?

The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity, incurs an incremental manufacturing cost of $65 per screen. The SD can sell all its output to the outside market at a price of $100 per screen, after incurring a variable marketing and distribution cost of $8 per screen. If the AD purchases screens from outside suppliers at a price of $100 per screen, it will incur a variable purchasing cost of $7 per screen. Slate’s division managers can act autonomously to maximize their own division’s operating income. Q. Now suppose that the SD can sell only 70% of its output capacity of 20,000 screens per month on the open market. Capacity cannot be reduced in the short run. The AD can assemble and sell more than 20,000 TV sets per month. a. From the point of view of Slate’s management, how much of the SD output should be transferred to the AD?

Daily Kneads, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $20,000 for 20,000 pounds of the product. The costs per pound to make this product include: Cost per Pound $0.30 Direct Labor Direct Materials $0.60 $0.70 Allocated Unavoidable Overhead If Daily Kneads outsources, what is the savings (or loss) per pound for the company as a whole? If the amount is a loss include a negative sign (not parentheses) in your answer. "_"

Lakeside Inc. produces a product that currently sells for $60 per unit. Current production costs per unit include direct materials, $16; direct labor, $18; variable overhead, $11; and fixed overhead, $11. Product engineering has determined that certain production changes could refine the product quality and functionality. These new production changes would increase material and labor costs by 20% per unit. Lakeside has received an offer from a nonprofit organization to buy 9,200 units at $46 per unit. Lakeside currently has unused production capacity. Required: a. Calculate the effect on Lakeside's operating income of accepting the order from the nonprofit organization. Increase in operating income

A small shop in Bulacan fabricates portable threshers for palay producers in the locality. The shop can produce each thresher at a labor cost of P1,800. The cost of materials for each unit is P2,500. The variable costs amount to P650 per unit, while fixed charges incurred per annum totals P69,000. If the portable threshers are sold at P7,800 per unit, how many units must be produced and sold per annum to break-even? Support your answer with computations and also by graphical solution.

Jordan Corporation, which makes and sells 80,600 radios annually, currently purchases the radio speakers it uses for $25 each. Each radio uses one speaker. The company has idle capacity and is considering the possibility of making the speakers that it needs. Jordan estimates that the cost of materials and labor needed to make speakers would be a total of $23 for each speaker. In addition, supervisory salaries, rent, and other manufacturing costs would be $181,000. Allocated facility-level costs would be $97,800. Required a. Determine the change in net income Jordan would experience if it decides to make the speakers. Net income will be lower by

The Wood Division of Sheridan Company manufactures rubber moldings and sells them externally for $55. Its variable cost is $38 per unit, and its fixed cost per unit is $5. Sheridan’s president wants the Wood Division to transfer 4300 units to another company division at a price of $23.Assuming the Wood Division has available capacity of 4300 units, the minimum transfer price it should accept is $5. $23. $38. $55.

Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 40,000 parts is $130,000, which includes fixed costs of $90,000 and variable costs of $40,000. The company can buy the part from an outside supplier for $3.30 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 for $179,000 profit. If Harvey Automobiles makes the part, what will its operating income be?  $179,000 greater than if the company bought the part  $49,000 greater than if the company bought the part  $49,000 less than if the company bought the part  $79,000 greater than if the company bought the part

Campbell Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,200 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 6,900 6,400 4,100 9,600 26,600 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Campbell for $2.80 each. Required a. Calculate the total relevant cost. Should Campbell continue to make the containers? b. Campbell could lease the space it currently uses in the manufacturing process. If leasing would produce $12,800 per month, calculate the total avoidable costs. Should Campbell continue to make the containers? a. Total relevant cost Should Campbell continue to make the containers? b. Total avoidable cost Should Campbell continue to make the containers?

Deli's Fudge Factory currently makes fudge for retail and mail order customers. It also offers a variety of roasted nuts. Fudge sales have increased over the past year, so Deli is considering outsourcing the roasted nuts and using the roasting space to make additional fudge. A reliable supplier has quoted a price of £0.85 per pound for the roasted nuts. The following amounts reflect the in-house manufacturing costs per pound for the roasted nuts: Direct materials Direct labour Unit-related support costs Batch-related support costs Product-sustaining support costs Facility-sustaining support costs Total cost per pound £0.50 0.06 0.10 0.04 0.05 0.15 £0.90 Required: Should Deli's Fudge Factory outsource the roasted nuts? Why or why not? Discuss all items that should be considered. a.