Items 1 and 2 are based on Kingston Company, which needs 10,000 units of a certain part to be used in its production cycle. If Kingston buys the part from Utica Company instead of making it Kingston could not use the realized facilities in another manufacturing activity. 60% of the fixed overhead applied will continue regardless of what decision is made. The following information is available: Cost of Kingston to make the part: Direct materials P6 Direct labor Variable overhead Fixed overhead applied 24 12 15 Cost to buy the part from Utica Company P53 1. In deciding whether to make or buy the part, Kingston's total relevant costs to make the part are: b. P480,000 a. P342,000 c. P530,000 d. P570,000 2. Which alternative is more desirable for Kingston and by what amount? b. Make, P50,000 c. Buy, P40,000 a. Buy, P50,000 d. Make, P40,000

Items 1 and 2 are based on Kingston Company, which needs 10,000 units of a certain part to be used in its production cycle. If Kingston buys the part from Utica Company instead of making it Kingston could not use the realized facilities in another manufacturing activity. 60% of the fixed overhead applied will continue regardless of what decision is made. The following information is available: Cost of Kingston to make the part: Direct materials P6 Direct labor Variable overhead Fixed overhead applied 24 12 15 Cost to buy the part from Utica Company P53 1. In deciding whether to make or buy the part, Kingston's total relevant costs to make the part are: b. P480,000 a. P342,000 c. P530,000 d. P570,000 2. Which alternative is more desirable for Kingston and by what amount? b. Make, P50,000 c. Buy, P40,000 a. Buy, P50,000 d. Make, P40,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 2PB: Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500...

See similar textbooks

Similar questions

The following product Costs are available for Haworth Company on the production of chairs: direct materials, $15,500; direct labor, $22.000; manufacturing overhead, $16.500; selling expenses, $6,900; and administrative expenses, $15,200. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 7,750 equivalent units are produced, what is the equivalent material cost per unit? If 22,000 equivalent units are produced, what is the equivalent conversion cost per unit?
The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500 machine hours. The cost to make Job 416 is $95 in neon, 15 hours of labor at $13 per hour, and five machine hours. During the month, it incurs $95 in indirect material cost, $130 in administrative labor, $320 in utilities, and $350 in depreciation expense. What is the predetermined overhead rate if machine hours are considered the cost driver? What is the cost of Job 416? What is the overhead incurred during the month?
Box Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen is $35 per unit and $55 is used in direct labor, while the direct material for the king is $55 per unit, and the labor cost is $70 per unit. Box Springs estimates it will make 4,300 queens and 3,000 kings in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?
The following standard costs pertain to a component part manufactured by Ashby Company:Direct materials$2Direct labour5Manufacturing overhead 20 Standard cost per unit $27The company can purchase the part from an outside supplier for $25 per unit. The manufacturing overhead is 60% fixed and this fixed portion would not be affected by this decision. Assume that direct labour is an avoidable cost in this decision. What is the relevant amount of the standard cost per unit to be considered in a decision of whether to make the part internally or buy it from the external supplier?
Jensen Corporation produces a part for use in the production of one of its products. The per-unit costs associated with the annual production of 1,000 units of this part are as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total costs $5.25 $12.00 $2.75 $6.00 $26.00 $2,500 of the fixed factory overhead costs associated with the production of this product are common fixed costs. Wells Company has offered to sell 1,000 units of the same part to Jensen Corporation for $21 per unit. Jensen should: Select one: O a. Buy the part, because this would save the company $5.00 per unit. O b. Make the part, because this would save the company $1.00 per unit. O c. Make the part, because this would save the company $2,500 annually. O d. Buy the part, because this would save the company $2,500 annually.
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $19, computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $7 5 2 5 $ 19 An outside supplier has offered to provide the annual requirement of 6,600 of the parts for only $15 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:
Angler Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below. Assembly 248,888 DLH Finishing 154,000 DLH 68,000 MH 448,800 MH $440,000 Direct labor hours Machine hours Overhead costs Assume that Angler Industries allocates overhead using a plantvide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 3.90 machine hours in the Assembly Department, and 4.00 direct labor hours and 0.6 machine hours in the Finishing Department? Multiple Chaises O O O $21.50 $17.60 $2.00. $18.10 $ 677,680 $13.20.
Crane Manufacturing Company Inc. uses 640 units of Part # 4317 each year in the manufacture of one of its products. The company currently produces the part internally, but an outside supplier has offered to provide the part at a price of $100 per part. If Crane chooses to purchase the part from the outside supplier, one third of it's the fixed manufacturing overhead will be eliminated. The company's standard unit cost of producing the part is listed below. Direct material Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost $32 30 29 33 Crane $124 Ignoring qualitative factors, should Crane continue to make the parts internally or purchase them from the outside supplier? ✓ continue to make the part.
Scott Corporation produces a part for use in the production of one of its products. The per-unit costs associated with the annual production of 1,000 units of this part are as follows: Direct Materials $10.50 $24.00 Direct labor Variable factory overhead $5.50 Fixed factory overhead $12.00 Total Costs $52.00 $5,000 of the fixed factory overhead costs associated with the production of this product are common fixed costs. Larson Company has offered to sell 1,000 units of the same part to Scott Corporation for $42 per unit. Scott should: Select one: a. buy the part, because this would save $10.00 per unit. X b. buy the part, because this would save the company $5,000 annually. c. make the part, because this would save the company $5,000 annually. d. make the part, because this would save $2.00 per unit.
Zesta Company produces a part used in the manufacture of one of its products. The unit product cost is $18, computed as follows: Direct materials $ 8 Direct labor 4 Variable manufacturing overhead Fixed manufacturing overhead Unit product cost 1 $ 18 An outside supplier has offered to provide the annual requirement of 4,000 of the parts for only $14 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Based on these data, whether the company accept or reject the supplier offer? And Why?
company manufactures a certain part for use in its assembly operation. cost per unit for 5,000 units of part is a total of P26.00 from the following: direct labor is P12.00; direct materials is P2.00; fixed factory overhead is P7.00 and variable factory overhead is P5.00. Company B offered company A 5,000 units for P27.00 per unit. If company A accepts some of its facilities presently used to manufacture the part could be used to help with the manufacture of part, thus saving P40,000.00 in relevant cost in its manufacture and eliminating P3.00 per unit of the fixed factory overhead. find the savings if any from buying instead of making.