Question 4 Mikey Motor Ltd., manufactures a variety of motorcycles. The company has always produced all of the necessary parts for its motorcycles, including engines. An outside supplier has offered to sell one type of engine to Mikey Motor Ltd., for a cost of $31 per unit. To evaluate this offer, Mikey Motor Ltd., has garnered the following information relating to its own cost of producing the engine internally: Assuming the company has no alternative use for the facilities that are now being used to produce the engines, what would be the financial advantage (disadvantage) of buying 10,000 engines from the outside supplier? Direct Materials $15 Per Unit Variable manufacturing $4 overhead Fixed Direct Labor $10 $100,000 manufacturing overhead, traceable* 10,000 units per year $3 $150,000 $40,000 $30,000

Question 4 Mikey Motor Ltd., manufactures a variety of motorcycles. The company has always produced all of the necessary parts for its motorcycles, including engines. An outside supplier has offered to sell one type of engine to Mikey Motor Ltd., for a cost of $31 per unit. To evaluate this offer, Mikey Motor Ltd., has garnered the following information relating to its own cost of producing the engine internally: Assuming the company has no alternative use for the facilities that are now being used to produce the engines, what would be the financial advantage (disadvantage) of buying 10,000 engines from the outside supplier? Direct Materials $15 Per Unit Variable manufacturing $4 overhead Fixed Direct Labor $10 $100,000 manufacturing overhead, traceable* 10,000 units per year $3 $150,000 $40,000 $30,000

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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Concord Corporation can produce 100 units of a necessary component part with the following costs: Direct Materials $23000 Direct Labor 9000 Variable Overhead Fixed Overhead 25000 O $50000 O $57000 O $62000 O $64000 12000 If Concord Corporation purchases the component externally, $5000 of the fixed costs can be avoided. Below what external price for the 100 units would Concord choose to buy instead of make the units?
Zachary Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (14,700 units x $19) Labor (14,700 units × $25) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs Total cost to make 14,700 engines *The equipment has a book value of $101,000 but its market value is zero. Required $ 279,300 367,500 37,000 84,000 16,000 79,000 $ 862,800 a. Determine the maximum price per unit that Zachary would be willing to pay for the engines. b. Determine the maximum price per unit that Zachary would be willing to pay for the engines, if production increased to 18,350 units. Note: For all requirements, round intermediate and final answers to 2 decimal places. a. Maximum price per unit b. Maximum…
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Swifty's Manufacturing Company can make 100 units of a necessary component part with the following costs: Direct Materials Direct Labor Variable Overhead Fixed Overhead $117000 22000 49000 30000 If Swifty's Manufacturing Company purchases the component externally, $20000 of the fixed costs can be avoided. What is the maximum amount Swifty is willing to pay to purchase the 100 units? $218000 O $188000 $198000 $208000
Subject: acounting
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A3
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6. Laura Riley manages a fleet of 225 delivery trucks for Poole Corporation. 1(Click the icon to view additional information.) Requirement 1. Which alternative will maximize Poole's short-term operating income? In order to maximize short-term operating income, Poole Corporation should because the variable cost of outsourcing to FMS results in (2) |(1) of Requirement 2. What qualitative factors should Poole consider before making a final decision? ○ A. Will laying off five employees hurt the morale and productivity of other employees remaining with Poole? ○ B. Will FMS provide speedy maintenance and repairs? ○ C. Will FMS provide the level of service Poole needs? ○ D. Will FMS quickly and satisfactorily handle calls and questions from Poole's employees who are driving the trucks? ○ E. All of the above OF. None of the above Riley performed the following analysis: 2(Click the icon to view the outsourcing decision analysis.) Read the requirements³. 1: More Info Riley must decide whether…