Please do not give solution in image format thanku Genent's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1070 units are as follows:Direct materials$41,0007500Direct laborVariable overhead costsFixed overhead costs29,50020,000$90,000Total costsIt is estimated that 8% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Genent's Engine Company hasthe option of purchasing the part from an outside supplier at $94.75 per unit.If Genent's Engine Company purchases 1070 TE456 parts from the outside supplier per month, then its monthly operating income willincrease by $21,783decrease by $21,783increase by $32,483decrease by $32,483

Relevant cost is the cost that is different between different alternatives. This cost is considered…

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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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Genent's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows: Direct materials $46,000 Direct labor 11,500 Variable overhead costs 34,500 Fixed overhead costs 23,000 Total costs $115,000 It is estimated that 8% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Genent's Engine Company has the option of purchasing the part from an outside supplier at $97.75 per unit. The maximum price per unit (TE456 part) that Genent's Engine Company should be willing to pay the…
W.T. Ginsburg Engine Company manufactures part ACT31107 used several of its engine models. Monthly production costs for 1,010 units are as follows: Direct materials Direct labor $46,000 11,500 Variable overhead costs 32,500 Fixed overhead costs 23,000 Total costs $113,000 is estimated that 10% of the fixed overhead costs assigned to ACT31107 will no longer be incurred if the company purchases ACT31107 from the outside supplier. W.T. Ginsburg Engine Company has the option of purchasing the part from an outside supplier at $96.75 per unit. W.T. Ginsburg Engine Company purchases 1,010 ACT31107 parts from the outside supplier per month, then its monthly operating income will (Round any intermediary calculations and your final answer to the nearest cent.) OA increase by $21,518 OB decrease by $5.418 OC. increase by $5,418 OD. decrease by $21,518 O Time Remaining: 02:15:58 Next 老 ) %23 20 8. 9 ఉతం W Y U R. S4
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ABC Company manufactures Part AA for use in its production cycle. The costs per unit for 25,000 units for the part are as follows: Direct materials P 7.50 Direct labor 37.50 Variable overhead 15.00 Fixed overhead 20.00 XYZ Company has offered to sell ABC Company the 25,000 units needed by the latter for P75 per unit. If ABC Company accepts the offer, the released facilities could be rented out in the amount of P112,500. In addition, P12.50 per unit of fixed overhead applied to part AA would be eliminated or avoided. What alternative is more desirable and by what amount it is more desirable? 1. Buy - P 50,000 2. Make - P50,000 3. Buy - P262,500 4. Make - P 262,500 O 1 O 2 O 3 O 4
Super Corporation produces a part used in the manufacture of one of its products. The unit product cost is $21, computed as follows: Direct materials $ 6 Direct labor 8 Variable manufacturing overhead 2 Fixed manufacturing overhead 5 Unit product cost $ 21 An outside supplier has offered to provide the annual requirement of 6,500 of the parts for only $13 each. The company estimates that 80% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be: Question 15Answer a. $7 per unit on

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