Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows:Direct materialsDirect laborVariable overheadFixed overhe ad$48.0040.0037.0034 00$159.00TotalCrayola Technologies Inc. has contacted Rublum with an offer to sell 9000 of the subassemblies for $145.00 each. Rublum will eliminate$93,000 of fixed overhead if it accepts the proposal. What are the relevant costs for Rubium?$1,218,000$831,000$1,524,000$885,000

Relevant cost = (Direct material + direct labor + variable overhead) x no. of units + Avoidable…

Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials Direct labor Variable overhead Fixed overhead Total $48.00 40.00 37.00 34.00 $159 00 Crayola Technologies Inc. has contacted Rubium with an offer to sell 9000 of the subassemblies for $145.00 each. Rublum will eliminate $93,000 of fixed overhead if it accepts the proposal. What are the relevant costs for Rubium? $1,218,000 $831,000 $1,524,000 $885,000

Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials Direct labor Variable overhead Fixed overhead Total $48.00 40.00 37.00 34.00 $159 00 Crayola Technologies Inc. has contacted Rubium with an offer to sell 9000 of the subassemblies for $145.00 each. Rublum will eliminate $93,000 of fixed overhead if it accepts the proposal. What are the relevant costs for Rubium? $1,218,000 $831,000 $1,524,000 $885,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.50 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Annual fixed costs Variable cost per switch Machine A $632,400 1.78 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 235,000 switches per year and what is the total cost of that alternative? Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Machine B $ 860,100 0.80 Minimum number of switches For each machine, what is the minimum number of switches that…
Ahrends Corporation makes 46,000 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 Unit product cost $ 14.30 23.90 3.00 28.30 $69.50 An outside supplier has offered to sell the company all of these parts it needs for $55.80 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $368,000 per year If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $24.90 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products What…
CM Manufacturing has provided the following unit costs pertaining to a component they manufacture and use in the production of one of their main products: Direct materials $315 Direct labor (variable) 96 Variable manufacturing overhead 72 Fixed manufacturing overhead 29 A supplier has offered to provide the component to CM manufacturing for 500 per unit. CM Manufacturing currently has no plans to use idle space that would be created if accepting offer from supplier. Assuming that CM Manufacturing needs 2,000 components annually and the fixed manufacturing overhead is unavoidable, what would be the impact on operating income the company outsources? **Show your work to support your answer.
Leach Finishing makes various metal fittings for the construction industry. Three of the fittings, models X-12, X-24, and X-30, require grinding on a patented machine of which Leach has only one. The cost of production information for the three products follow: X-12 $35 $ 20 18.0 Price per fitting Variable cost per fitting Units per hour of grinding The testing machine used for both models has a capacity of 3,230 hours annually. Fixed manufacturing costs are $496,000 annually. Required A Required B X-24 $ 51 $ 27 12.5 Required: a. Suppose that Leach Finishing can sell at most 59,200 units of any one fitting. How many units of each fitting model should Leach Finishing produce annually? b. Suppose that Leach Finishing can sell at most 18,000 units of any one fitting. How many units of each fitting should Leach Finishing produce annually? X-30 $ 70 $ 44 10.0 Complete this question by entering your answers in the tabs below. X-12 X-24 X-30 units units units Suppose that Leach Finishing can…
Lakeside Incorporated produces a product that currently sells for $46.80 per unit. Current production costs per unit include direct materials, $13; direct labor, $15; varlable overhead, $6.50; and fixed overhead, $6.50. Product engineering has determined that a certain part of the product conversion process could be outsourced. Raw material costs would not be affected, but direct labor and variable overhead costs would be reduced by 30%. No other opportunity is currently feasible for unused production capacity. Required: a. What would be the net cost advantage or disadvantage if Lakeview decided to outsource part of the conversion process at a cost of $5.20 per unit? Note: Do not round your Intermediate calculations. Round your final answer to 2 decimal places. b. Should Lakeside outsource part of the conversion process at a cost of $5.20 per unit? a. b. Should Lakeside outsource conversion process at this cost?
Value Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 32,000 parts is $90,000, which includes fixed costs of $30,000 and variable costs of $60,000. The company can buy this part from an external supplier for $5 per unit and avoid 10% of the fixed costs. If Value Electronics decides to outsource the production of the part, how will it impact its operating income? A. Operating income increases by $97,000. B. Operating income decreases by $100,000. C. Operating income decreases by $97,000. D. Operating income increases by $100,000.
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?
The make or buy decision Lakeview Engine Inc. produces engines for the watercraft industry. An outside manufacturer has offered to supply several component parts used in the engine assemblies, which are currently being produced by Lakeview. The supplier will charge Lakeview $270 per engine for the set of parts. Lakeview's current costs for those part sets are direct materials, $160; direct labor, $80; and manufacturing overhead applied at 100% of direct labor. Variable manufacturing overhead is considered to be 20% of the total, and fixed overhead will not change if the part sets are acquired from the outside supplier. bd 1200 Required: Should Lakeview Engine continue to make the part sets or accept the offer to purchase them for $270? Ovin
Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys the Part GX from McMillan Company for $79 instead of making it, Edidas will not use the released facilities in another manufacturing activity. Twenty percent of the fixed overhead will continue irrespective of CEO Donald Mickey's decision. The cost per unit data are as follows: Cost to make the part Direct Materials Direct Labor (S) 30 15 Variable Overhead 20 Fixed Overhead 20 85 Required : 1. Explain which alternative is more attractive to Edidas, make or buy Part GX. 2. Assume there is new information that Edidas is negotiating to purchase cheaper raw materials from supplier (Twenty percent lower price). Is this information relevant or irrelevant? On the basis of financial considerations alone, should Edidas make or buy Part GX? Show your calculations 3. Based on requirement 2, what are relevant qualitative factors that Edidas should consider to decide whether to make or buy Part GX?…
A customer has requested that Stanford Corporation fill a special order for 9,000 units of product S47 for $20.50 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $14.40: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost O $(9,900) Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $5.00 per unit and that would require an investment of $36,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: O $4,500 S O $54,900 O…
Dewey Manufacturing has been approached by a new customer with an offer to purchase 500 units of its hands-free automotive model SMAK at a price of $15,000 per unit. Existing sales would not be affected, and Dewey has sufficient capacity to produce the special order. Fixed overhead will not change if Dewey accepts the order or not. Unit cost data is: Per Unit: Direct Materials $6,000 Direct Labor $2,500 Variable OVHD $3,500 Fixed OVHD $10,000 $22,000 Normal sales price is $27,000. Assume Dewey decides to accept the order. How much will their operating income change? Should they have accepted the order