Question 6 Amundsen Company makes 60,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Selling Fixed Selling Total $ 10.10 $17.40 $ 2.70 $15.00 $ 2.75 $ 3.25 $51.20 An outside supplier has offered to sell the company all of these parts it needs. If the company accepts this offer, the facilit now being used to make the part would be idle and fixed manufacturing overhead would be reduced by 80% of current c The variable selling costs would be reduced to 40% of current cost. Required: What is the maximum amount the company should be willing to pay an outside supplier per unit for the part?

Question 6 Amundsen Company makes 60,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Selling Fixed Selling Total $ 10.10 $17.40 $ 2.70 $15.00 $ 2.75 $ 3.25 $51.20 An outside supplier has offered to sell the company all of these parts it needs. If the company accepts this offer, the facilit now being used to make the part would be idle and fixed manufacturing overhead would be reduced by 80% of current c The variable selling costs would be reduced to 40% of current cost. Required: What is the maximum amount the company should be willing to pay an outside supplier per unit for the part?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter13: Lean Manufacturing And Activity Analysis

Section: Chapter Questions

Problem 14E

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Answer and solution pls Motor Company manufactures 10,000 units of Part M-l each year for use in its production. The following total costswere reported last year:Direct materials P 20,000Direct labor 55,000Variable manufacturing overhead 45,000Fixed manufacturing overhead 70,000Total manufacturing cost P190,000Valve Company has offered to sell Motor 10,000 units of Part M-l for P18 per unit. If Motor accepts the offer,some of the facilities presently used to manufacture Part M-l could be rented to a third party at an annual rental ofP15,000. Additionally, P4 per unit of the fixed overhead applied to Part M-l would be totally eliminated. ShouldMotor Company accept Valve Company's offer, and why?a. No, because it would be P5,000 cheaper to make the part.b. Yes, because it would be P10,000 cheaper to buy the part.c. No, because it would be P15,000 cheaper to make the part.d. Yes, because it would be P25,000 cheaper to buy the part.
Requlred Informatlon [The following information applies to the questions displayed below] Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product Its average cost per unit for each product at this level of activity are given below. Alpha $ 42 42 Beta $ 24 Direct materials Direct labor Variable manufacturing overhead Traceable Fixed manufacturing overhead Variable selling expenses Common fixed expenses てE 24 26. 34, 27 34 Total cost per unit $209 $173 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. Requlred: 1 What is the total amount of traceable fixed manufacturing overhead for each of the two products? Alpha Beta Traceable fixed manufacturing…
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Requlred Informatlon [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product Its average cost per unit for each product at this level of activity are given below. Alpha $42 42 $24 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 24 26. 34 27 29. $173 Total cost per unit The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 4. Assume that Cane expects to produce and sell 109,000 Betas during the current year. One of Cane's sales representatives has found a new customer who is willing to…
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Q – 10: Sohar Company manufactures 10,000 units of a spare part ALFA each year for use on its production line. At this level of activity, the cost per unit for part ALFA is as follows: Direct materials $ 2.40 Direct labor 3.50 Variable manufacturing overhead 1.60 Fixed manufacturing overhead 5.00 Total cost per part $12.50 An outside supplier has offered to sell 15,000 units of spare part ALFA each year to Sohar Company for $11.75 per part. If Sohar Company accepts this offer, the facilities now being used to manufacture ALFA could be rented to another company at an annual rental of $75,000. However, Sohar Company has determined that $3 of the fixed manufacturing overhead being applied to part ALFA would continue even if part ALFA were purchased from the outside supplier. Required: a) Prepare computations showing how much profits will increase or decrease if the outside supplier’s offer is accepted. b) Also mention which cost is opportunity cost…
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