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Dough, Re, Mi Inc. sells many different types of cookie dough. The company is deciding whether to continue making its own dough or to outsource. If the company outsources, they will eliminate all of the variable overhead and 30% of the fixed manufacturing overhead, but will incur shipping costs. Use the information below to detemine whether Dough, Re, Mi Inc. should outsource or not. Data Units Per unit Relevant? Sales price per unit 5,750 111.00 Direct materials per unit 24.00 Direct labor per unit 18.00 14.00 Variable manufacturing overhead Fixed manufacturing overheMOH) : per unit per month 28.00 Avoidable fixed MOH per month n/a Unavoidable fixed MOH per month n/a Sales commissions per unit 3.00 Advertising costs per month 1.80 Purchase price of outsourced product per unit 59.00 Shipping costs of outsourced product per unit 1.00 Costs per unit Incremental analysis Manufacture Outsource Manuf Variable costs Enter "-0" in the cell for any cost not relevant to the decision. Direct materials n/a Direct labor n/a n/a Variable manufacturing overhead Purchase price n/a Shipping costs n/a Instructions A M6 Project +

Dough, Re, Mi Inc. sells many different types of cookie dough. The company is deciding whether to continue making its own dough or to outsource. If the company outsources, they will eliminate all of the variable overhead and 30% of the fixed manufacturing overhead, but will incur shipping costs. Use the information below to detemine whether Dough, Re, Mi Inc. should outsource or not. Data Units Per unit Relevant? Sales price per unit 5,750 111.00 Direct materials per unit 24.00 Direct labor per unit 18.00 14.00 Variable manufacturing overhead Fixed manufacturing overheMOH) : per unit per month 28.00 Avoidable fixed MOH per month n/a Unavoidable fixed MOH per month n/a Sales commissions per unit 3.00 Advertising costs per month 1.80 Purchase price of outsourced product per unit 59.00 Shipping costs of outsourced product per unit 1.00 Costs per unit Incremental analysis Manufacture Outsource Manuf Variable costs Enter "-0" in the cell for any cost not relevant to the decision. Direct materials n/a Direct labor n/a n/a Variable manufacturing overhead Purchase price n/a Shipping costs n/a Instructions A M6 Project +

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A D E F usourcing 5 Dough, Re, Mi Inc. sells many different types of cookie dough. The company is deciding whether to continue making its own dough or to outsource. 6. If the company outsources, they will eliminate all of the variable overhead and 30% of the fixed manufacturing overhead, but will incur shipping costs. 7. Use the information below to detemine whether Dough, Re, Mi Inc. should outsource or not. 8 9. 10 Data Units Per unit Relevant? 11 Sales price per unit 5,750 $ 111.00 12 Direct materials per unit 24.00 13 Direct labor per unit 18.00 14 Variable manufacturing overhead per unit 14.00 15 „Fixed manufacturing overh MOH): per month 28.00 16 Avoidable fixed MOH per month n/a 17 Unavoidable fixed MOH per month n/a 18 Sales commissions per unit 3.00 19 Advertising costs per month 1.80 20 Purchase price of outsourced product per unit 59.00 21 Shipping costs of outsourced product per unit 1.00 22 23 6497FDCF- 24 Costs per unit \6E-47...6B.J 25 Incremental analysis Manufa Manufacture Outsource 26 Variable costs Enter "=0" in the cell for any cost not relevant to the decision. 27 Direct materials n/a 28 Direct labor n/a Variable manufacturing overhead Purchase price 29 n/a 30 n/a 31 Shipping costs n/a Instructions A M6 Project Ready Screen Shot Solivio Samantha_Olivio 2022-02...7.26 PM Transcript.pdf M13A1
Transcribed Image Text:A D E F usourcing 5 Dough, Re, Mi Inc. sells many different types of cookie dough. The company is deciding whether to continue making its own dough or to outsource. 6. If the company outsources, they will eliminate all of the variable overhead and 30% of the fixed manufacturing overhead, but will incur shipping costs. 7. Use the information below to detemine whether Dough, Re, Mi Inc. should outsource or not. 8 9. 10 Data Units Per unit Relevant? 11 Sales price per unit 5,750 $ 111.00 12 Direct materials per unit 24.00 13 Direct labor per unit 18.00 14 Variable manufacturing overhead per unit 14.00 15 „Fixed manufacturing overh MOH): per month 28.00 16 Avoidable fixed MOH per month n/a 17 Unavoidable fixed MOH per month n/a 18 Sales commissions per unit 3.00 19 Advertising costs per month 1.80 20 Purchase price of outsourced product per unit 59.00 21 Shipping costs of outsourced product per unit 1.00 22 23 6497FDCF- 24 Costs per unit \6E-47...6B.J 25 Incremental analysis Manufa Manufacture Outsource 26 Variable costs Enter "=0" in the cell for any cost not relevant to the decision. 27 Direct materials n/a 28 Direct labor n/a Variable manufacturing overhead Purchase price 29 n/a 30 n/a 31 Shipping costs n/a Instructions A M6 Project Ready Screen Shot Solivio Samantha_Olivio 2022-02...7.26 PM Transcript.pdf M13A1
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How are the avoidable fixed MOH and the unavoidable fixed MOH calculated? I see that they equal the total fixed manufacturing overheads, but I don't know how those amounts were figured out.

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