Required Information Exercise 4-39 and 4-40 (Algo) (LO 4-4) [The following information applies to the questions displayed below.] Harbortown Marine Products (HMP) manufactures and sells various fixtures for boat cabins. One fixture uses a specialized fitting that is not used in any other HMP product. The management of HMP has considered outsourcing the fitting for several years but has never identified a suitable supplier. HMP has collected the following data on the cost of the fitting: Materials Labor Manufacturing overhead Total Rivard Fittings, a local auto supplier, contacts HMP and tells them that because of the loss of one of Rivard's customers. there is enough capacity to produce up to 5,000 units of the fitting monthly. Rivard has offered to sell HMP any quantity (up to 5,000 units monthly) at a price of $22.55 per fitting. $7.25 5.65 15.25 $ 28.15 If Rivard supplies all of the 3,340 fittings currently produced by HMP, HMP will avoid all of the variable overhead associated with the fitting and one-third of the fixed overhead. Management estimates that variable overhead for the fitting is $5.65 per unit. xercise 4-39 (Algo) Make-or-Buy Decisions (LO 4-4) equired: Prepare a schedule that shows the differential costs. Should HMP continue to make the fittings or buy them from Rivard Fittings? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule that shows the differential costs. Note: Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect. Cost to buy Direct material Direct labor Variable overhead Fixed overhead Total costs Status Quo Alternative (Make) (Buy) $ 0 $ 0 Required A Difference Required B >
Required Information Exercise 4-39 and 4-40 (Algo) (LO 4-4) [The following information applies to the questions displayed below.] Harbortown Marine Products (HMP) manufactures and sells various fixtures for boat cabins. One fixture uses a specialized fitting that is not used in any other HMP product. The management of HMP has considered outsourcing the fitting for several years but has never identified a suitable supplier. HMP has collected the following data on the cost of the fitting: Materials Labor Manufacturing overhead Total Rivard Fittings, a local auto supplier, contacts HMP and tells them that because of the loss of one of Rivard's customers. there is enough capacity to produce up to 5,000 units of the fitting monthly. Rivard has offered to sell HMP any quantity (up to 5,000 units monthly) at a price of $22.55 per fitting. $7.25 5.65 15.25 $ 28.15 If Rivard supplies all of the 3,340 fittings currently produced by HMP, HMP will avoid all of the variable overhead associated with the fitting and one-third of the fixed overhead. Management estimates that variable overhead for the fitting is $5.65 per unit. xercise 4-39 (Algo) Make-or-Buy Decisions (LO 4-4) equired: Prepare a schedule that shows the differential costs. Should HMP continue to make the fittings or buy them from Rivard Fittings? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule that shows the differential costs. Note: Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect. Cost to buy Direct material Direct labor Variable overhead Fixed overhead Total costs Status Quo Alternative (Make) (Buy) $ 0 $ 0 Required A Difference Required B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
im.8
![Required information
Exercise 4-39 and 4-40 (Algo) (LO 4-4)
[The following information applies to the questions displayed below.]
Harbortown Marine Products (HMP) manufactures and sells various fixtures for boat cabins. One fixture uses a specialized
fitting that is not used in any other HMP product. The management of HMP has considered outsourcing the fitting for
several years but has never identified a suitable supplier. HMP has collected the following data on the cost of the fitting:
Materials
Labor
Manufacturing overhead
Total
Rivard Fittings, a local auto supplier, contacts HMP and tells them that because of the loss of one of Rivard's customers.
there is enough capacity to produce up to 5,000 units of the fitting monthly. Rivard has offered to sell HMP any quantity
(up to 5,000 units monthly) at a price of $22.55 per fitting.
If Rivard supplies all of the 3,340 fittings currently produced by HMP, HMP will avoid all of the variable overhead
associated with the fitting and one-third of the fixed overhead. Management estimates that variable overhead for the
fitting is $5.65 per unit.
Exercise 4-39 (Algo) Make-or-Buy Decisions (LO 4-4)
$7.25
5.65
15.25
$ 28.15
Required:
a. Prepare a schedule that shows the differential costs.
b. Should HMP continue to make the fittings or buy them from Rivard Fittings?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Cost to buy
Direct material
Direct labor
Variable overhead
Fixed overhead
Total costs
Prepare a schedule that shows the differential costs.
Note: Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.
Status Quo Alternative
(Make)
(Buy)
S
0 $
0
< Required A
Difference
Required B >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb5833acf-6c85-4488-81f9-4678b731abbe%2F694cb240-b03b-4b32-a3b6-efaf42e1252a%2Fngr8cfd_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
Exercise 4-39 and 4-40 (Algo) (LO 4-4)
[The following information applies to the questions displayed below.]
Harbortown Marine Products (HMP) manufactures and sells various fixtures for boat cabins. One fixture uses a specialized
fitting that is not used in any other HMP product. The management of HMP has considered outsourcing the fitting for
several years but has never identified a suitable supplier. HMP has collected the following data on the cost of the fitting:
Materials
Labor
Manufacturing overhead
Total
Rivard Fittings, a local auto supplier, contacts HMP and tells them that because of the loss of one of Rivard's customers.
there is enough capacity to produce up to 5,000 units of the fitting monthly. Rivard has offered to sell HMP any quantity
(up to 5,000 units monthly) at a price of $22.55 per fitting.
If Rivard supplies all of the 3,340 fittings currently produced by HMP, HMP will avoid all of the variable overhead
associated with the fitting and one-third of the fixed overhead. Management estimates that variable overhead for the
fitting is $5.65 per unit.
Exercise 4-39 (Algo) Make-or-Buy Decisions (LO 4-4)
$7.25
5.65
15.25
$ 28.15
Required:
a. Prepare a schedule that shows the differential costs.
b. Should HMP continue to make the fittings or buy them from Rivard Fittings?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Cost to buy
Direct material
Direct labor
Variable overhead
Fixed overhead
Total costs
Prepare a schedule that shows the differential costs.
Note: Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.
Status Quo Alternative
(Make)
(Buy)
S
0 $
0
< Required A
Difference
Required B >
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