Every year Cheyenne Industries manufactures 8,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total Pharoah, Inc., has offered to sell 8,000 units of part 231 to Cheyenne for $32 per unit. If Cheyenne accepts Pharoah's offer, its freed-up facilities could be used to earn $13,700 in contribution margin by manufacturing part 240. In addition, Cheyenne would eliminate 40% of the fixed overhead applied to part 231. (a) $3.00 9.00 7.00 10.00 $29.00 Your answer is partially correct. Calculate total relevant cost to make and net cost to buy. Total relevant cost to make $ Net relevant cost to buy $ 120000 242300 I SUPE

Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 36,000 parts is $ 100,000, which includes fixed costs of $ 40,000 and variable costs of $ 60,000. The company can buy the part from an outside supplier for $2 per unit and avoid 20% of the fixed costs. Assume that the company can use the freed manufacturing space to make another product that can earn a profit of $ 15,000. If Voltaic outsources, what will be the effect on operating income?A. decrease of $11,000B. increase of $ 11,000C. increase of $ 15,000D . decrease of $ 8,000

Melbourne Corporation has traditionally made a subcomponent of its major product. Annual production of 30,000 subcomponents results in the following costs:   Direct materials $ 250,000 Direct labor $ 200,000 Variable manufacturing overhead $ 190,000 Fixed manufacturing overhead $ 120,000   Melbourne has received an offer from an outside supplier who is willing to provide the 30,000 units of the subcomponent each year at a price of $28 per unit. There would be no effect of this decision on the total fixed manufacturing overhead of the company. Melbourne knows that the facilities now being used to manufacture the subcomponent could be rented to another company for revenue of $80,000 per year if the subcomponent were purchased from the outside supplier.   The financial advantage (disadvantage) of making the subcomponent would be:   Multiple Choice $0 $280,000 $120,000 $200,000

Delta produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $ 90,000 Direct labor 130,000 Variable factory overhead Fixed factory overhead 140,000 Total costs $420,000 60,000 Of the fixed factory overhead costs, $60,000 is avoidable. 20) Conners has offered to sell 10,000 units of the same part to Delta for $36 per unit. Assuming there is no other use for the facilities, what is the effect on operating income if Delta buys from Conners? 21) Assuming no other use of their facilities, at what buying price per unit for Delta would Delta's operating income be the same whether they made the part or bought it from Conners?

Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys the Part GX from McMillan Company for $79 instead of making it, Edidas will not use the released facilities in another manufacturing activity. Twenty percent of the fixed overhead will continue irrespective of CEO Donald Mickey's decision. The cost per unit data are as follows: Cost to make the part Direct Materials Direct Labor (S) 30 15 Variable Overhead 20 Fixed Overhead 20 85 Required : 1. Explain which alternative is more attractive to Edidas, make or buy Part GX. 2. Assume there is new information that Edidas is negotiating to purchase cheaper raw materials from supplier (Twenty percent lower price). Is this information relevant or irrelevant? On the basis of financial considerations alone, should Edidas make or buy Part GX? Show your calculations 3. Based on requirement 2, what are relevant qualitative factors that Edidas should consider to decide whether to make or buy Part GX?…

Every year Blue Industries manufactures 7,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total (a) $3.00 Total relevant cost to make $ 11.00 Net relevant cost to buy $ 8.00 Cullumber, Inc., has offered to sell 7,300 units f part 231 to Blue for $33 per unit. If Blue accepts Cullumber's offer, its freed-up facilities could be used to earn $10,700 in contribution margin by manufacturing part 240. In addition, Blue would eliminate 50% of the fixed overhead applied to part 231. 10.00 $32.00 Calculate total relevant cost to make and net cost to buy.