1201:16:27eBookMH Lab 3: Relevant Costing1-b. Indicate whether the Provincial Bus Company's contract should be accepted.Ⓒ YesO No2-a. An outside contractor is willing to supply 5,250 engines at a price of $696 per unit. If the offer is accepted, the company will make5,250 engines in-house and buy 5,250 engines from the contractor. The company's fixed manufacturing costs will decline by 20% andthe variable marketing costs per unit on the 5,250 engines purchased will decline by 40%. Calculate the cost in each option. (Do notround intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.)Purchase costVariable manufacturingFixed manufacturingVariable marketingFixed marketingCost of optionDifference in favour of make optionBuy 5,250units andmake 5,250unitsO YesO NoMake 10,500units$$$3,633,000388,5002,436,000756,0001,680,000Saved8478472-b. Determine whether the contractor's offer should be accepted? 1201:17:05eBookThe Engine Guys produces specialized engines for "snow climber" buses. The company's normal monthly production volume is 10.500engines, whereas its monthly production capacity is 21,000 engines. The current selling price per engine is $1.450. The cost per unit ofmanufacturing and marketing the engines at the normal volume is as follows:Manufacturing costs:Direct materialsDirect labourVariable overheadFixed overheadSubtotalMarketing costs:VariableFixedSubtotalTotal unit costCosts perUnit forEngines$ 11423237232$ 615incremental benefit of the contract$ 72160232$ 847Required:Answer the following independent questions.1-0. The Provincial Bus Company wishes to purchase 770 engines in October. The bus company is willing to pay a fixed fee of$1,260,000 and reimburse The Engine Guys for all manufacturing costs incurred to manufacture 770 motors. October is a busy monthfor The Engine Guys, and there are sufficient orders to operate at 100% capacity utilization. There will be no variable marketing costson this government contract. Compute the incremental benefit of the contract.S371,910Help Save & Exi

A make or buy decision, also known as an insourcing versus outsourcing decision, is a strategic…

Answered: The Engine Guys produces specialized…

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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2 Saalfrank Corporation is considering two alternatives that are code-named M and N. Costs associated with the alternatives are listed below: Supplies costs Assembly costs. Power costs Inspection costs. Alternative M Alternative N $ 49,000 $ 30,000 $ 15,500 $ 12,000 a. Supplies costs a. Assembly costs a. Power costs a. Inspection costs b. Differential cost $ 55,000 $ 30,000 $ 10,000 $ 23,000 3 Required: a. Which costs are relevant and which are not relevant in the choice between these two alternatives? b. What is the differential cost between the two alternatives?
"That old equipment for producing oil drums is worn out," said Bill Seebach, president of Hondrich Company. "We need to make a decision quickly." The company is trying to decide whether it should rent new equipment and continue to make its oil drums internally or whether it should discontinue production and purchase them from an outside supplier. The alternatives follow: Saved Alternative 1: Rent new equipment for producing the oil drums for $208,000 per year. Alternative 2: Purchase oil drums from an outside supplier for $18.90 each. Hondrich Company's costs per unit of producing the oil drums internally (with the old equipment) are given below. These costs are based on a current activity level of 40,000 units per year: Direct materials Direct labour Variable overhead Fixed overhead ($2.60 supervision, $1.90 depreciation, and $5.00 general company overhead) Total cost per unit $5.40 8.00 2.00 9.50 $24.90 The new equipment would be more efficient and, according to the manufacturer,…
TB MC Qu. 23-112 (Static) Pinkin Incorporated needs to determine a price... Pinkin Incorporated needs to determine a price for a new phone model. Pinkin desires a 25% markup on the total cost of the phone. Pinkin expects to sell 30,000 phones. Additional information is as follows: Variable Costs per Unit Direct materials Direct labor Overhead General and administrative Multiple Choice Using the total cost method what price should Pinkin charge? O O $156.10 $162.50 $130.10 Fixed Costs (total) O $142.50 O $161.25 $ 15 Overhead 49 General and administrative 20 50 $ 85,000 65,000
PROBLEM 1: MAKE or BUY Limos Mfg. has been manufacturing furniture sets and is considering whether tomake or outsource its own seat cushions needed for its chairs. The expected priceof the cushions is P50 per unit. If it continue to produce the company would incur the following unit cost: Directmaterials P13, Direct Labor P15, Variable overhead 5, Fixed overhead (based onthe average production requirement of 10,000 units) P20 for a total of P53. Let us assume that materials and labor costs are expected to increase by 20% nextperiod. Factory overhead costs will remain the same, except that 40% of the fixedoverhead will be eliminated in case the company decides to buy the seat cushionsfrom other suppliers. Moreover, the facilities presently being used in the manufactureof seat cushions can be utilized to manufacture another part of the main product incase such facilities become vacant when the company decides to stop producing theseat cushions. The alternative use of resources would…
Question Feip Suppose that a manufacturer can produce a part for $9.00 with a fixed cost of $5,000. Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $11.00, which includes transportation. a. If the anticipated production volume is 1,500 units, compute the total cost of manufacturing and the total cost of outsourcing. b. What is the best decision? a. The total cost of manufacturing is $ (Simplify your answer.) PI ry sit nas mu Enter your answer in the answer box and then click Check Answer. parts remaining Check Answer Clear All Type here to search
Problem 6-18 (Algo) Relevant Cost Analysis in a Variety of Situations [LO6-2, LO6-3, LO6-4] Andretti Company has a single product called a Dak. The company normally produces and sells 87,000 Daks each year at a selling price of $60 per unit. The company's unit costs at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost per unit $ 7.50 8.00 2.90 5.00 ($435,000 total) 2.70 2.50 ($217,500 total) $28.60 A number of questions relating to the production and sale of Daks follow. Each question is independent. Required: 1-a. Assume that Andretti Company has sufficient capacity to produce 113,100 Daks each year without any increase in fixed. manufacturing overhead costs. The company could increase its unit sales by 30% above the present 87,000 units each year if it were willing to increase the fixed selling expenses by $110,000. What is the financial…
9. Bidbid Company is contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units: Direct materials Direct labor Variable overhead OMR 4 10 8 6 Fixed overhead A foreign company wants to purchase 2,000 units at a special unit price of OMR 25. The normal price per unit is OMR 40. Should the Bidbid Company accept this order.
Suppose that a manufacturer can produce a part for $11.00 with a fixed cost of $7,000. Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $13.00, which includes transportation. a. If the anticipated production volume is 1,300 units, compute the total cost of manufacturing and the total cost of outsourcing. b. What is the best decision? a. The total cost of manufacturing is $.
k esc Daily Kneads, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $20,000 for 20,000 pounds of the product. The costs per pound to make this product include: Direct Labor Direct Materials Allocated Corporate Overhead Calculate the incremental savings (or loss) per pound if the company outsources the product. If the company will lose money per pound by outsourcing, enter your answer with a negative sign "-" (not parentheses). Click Save and Submit to save and submit. Click Save All Answers to save all answers. 1 Q A Z 2 W S Cost per Pound $0.30 $0.40 $0.80 #3 X E $ 4 D. .:: R C 07 dº % 5 F MacBook Pro T 6 V G & Y 7 H B * 00 8 U J N O Save All O O K M
4 You are given the following for the production of office chairs by the company 'Chairs and More": ed Total Fixed Costs (JMD$) 10,000 10,000 Quantity produced out of 100 200 10,000 10,000 10,000 10,000 question 300 400 500 600 Variable cost per unit is $150. The production of 15,000 chairs will cost: Select one: O a. $2,250,000 O b. $1,500,000 O c. $10,000 O d. $2,260,000
QUESTION 9 QRC Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below: Alternative A Alternative B Projected revenue $ 62,500 $ 75,000 Unit-level costs 12,500 18,000 Batch-level costs 6,250 12,000 Product-level costs 7,500 8,500 Facility-level costs 5,000 6,250 What is the differential revenue for this decision? $62,500 $25,000 $75,000 $12,500
ex4. Differential Analysis for Further Processing The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminum will require additional processing costs of $620 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum (due to trim losses). Required: 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2). Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5 SellIngot(Alternative 1) ProcessFurther intoRolledAluminum(Alternative 2) DifferentialEffecton Income(Alternative 2) Revenues,…

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