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Bird’s Eye View manufactures satellite dishes used in residential and commercial installations for satellite-broadcasted television. For each unit, the following costs apply: $50 for direct material, $100 for direct labor, and $60 for variable
Year 1 | Year2 | |
Selling price per unit | $500 | $500 |
Number of units sold | 24,000 | 28,800 |
Number of units produced | 30,000 | 26,400 |
Beginning inventory (units) | 18,000 | 24,000 |
Ending inventory (units) | 24,000 | ? |
a. Prepare pre-tax income statements under absorption and variable costing for Year 1 and Year 2, with any volume variance being charged to Cost of Goods Sold.
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- Han Products manufactures 21,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials$ 3.50Direct labor9.00Variable manufacturing overhead2.50Fixed manufacturing overhead9.00Total cost per part$ 24.00 An outside supplier has offered to sell 21,000 units of part S-6 each year to Han Products for $20 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $71,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier’s offer?arrow_forwardOriole Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 45% of direct labour costs. The direct materials and direct labour costs per unit to make the lampshades are $4.70 and $5.90, respectively. Normal production is 50,800 table lamps per year. A supplier offers to make the lampshades at a price of $13.60 per unit. If Oriole Inc. accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $42,700 of fixed manufacturing overhead currently being charged to the lampshades will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the lampshades. (Round answers to O decimal places, eg 5.275. If an amount reduces the net income then enter with a negative sign preceding the number eg.-15,000 or parenthesis, eg (15,000) While alternate approaches are possible,…arrow_forwardEvery year Riverbed 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 $ 5.00 Direct labor 11.00 Variable manufacturing overhead 6.00 Fixed manufacturing overhead 10.00 Total $32.00 Ivanhoe, Inc., has offered to sell 7,300 units of part 231 to Riverbed for $34 per unit. If Riverbed accepts Ivanhoe’s offer, its freed-up facilities could be used to earn $10,500 in contribution margin by manufacturing part 240. In addition, Riverbed would eliminate 40% of the fixed overhead applied to part 231.(a) Calculate total relevant cost to make and net cost to buy. Total relevant cost to make $enter a dollar amount Net relevant cost to buy $enter a dollar amount (b) Should Riverbed accept Ivanhoe’s offer?arrow_forward
- Han Products manufactures 40,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per uni for part S-6 is: Direct materials Direct labor Variable manufacturing overhead $ 3.30 12.00 2.70 Fixed manufacturing overhead Total cost per part 6.00 $ 24.00 An outside supplier has offered to sell 40,000 units of part S-6 each year to Han Products for $22 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $90,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier's offer? Answer is complete but not entirely correct. Financial advantage $ 8,000 ×arrow_forwardHan Products manufactures 38,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part $ 3.10 10.00 2.90 9.00 $ 25.00 An outside supplier has offered to sell 38,000 units of part S-6 each year to Han Products for $21 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company for $88,000 per year. However, Han Products determined two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier's offer? > Answer is complete but not entirely correct. Financial advantage $ 126,000arrow_forwardEvery year Marigold Industries manufactures 6,100 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) Total relevant cost to make $ $4.00 Net relevant cost to buy 10.00 Carla Vista, Inc., has offered to sell 6,100 units of part 231 to Marigold for $34 per unit. If Marigold accepts Carla Vista's offer, its freed-up facilities could be used to earn $10,700 in contribution margin by manufacturing part 240. In addition, Marigold would eliminate 40% of the fixed overhead applied to part 231. $ 6.00 10.00 Calculate total relevant cost to make and net cost to buy. $30.00arrow_forward
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