Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 13, Problem 12E
Exercise 6-12A Outsourcing decision with qualitative factors
Kawai Corporation, which makes and sells 85,000 radios annually, currently purchases the radio speakers it uses for $8.00 each. Each radio uses one speaker. The company has idle capacity and is considering the possibility of making the speakers that it needs. Kawai estimates that the cost of materials and labor needed to make speakers would be a total of $6.50 for each speaker. In addition, supervisory salaries, rent, and other
Required
a. Determine the change in net income Kawai would experience if it decides to make the speakers.
b. Discuss the qualitative factors that Kawai should consider.
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Students have asked these similar questions
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
Question 17
Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 35,000
parts is $105,000, which includes fixed costs of $50,000 and variable costs of $55,000. The company can buy the part from
an outside supplier for $2 per unit and avoid 20% of the fixed costs. Assume that the company can use the freed
manufacturing space to make another product that can earn a profit of $16,000. If Voltaic outsources, what will be the effect
on operating income?
O decrease of $10.000
increase of $16,000
increase of $11.000
decrease of $11,000.
G
Exercise 6-10A (Algo) Outsourcing decision LO 6-3
Walton Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality
racing bikes with limited sales. Walton produces and sells only 7,600 bikes each year. Due to the low volume of activity, Walton is
unable to obtain the economies of scale that larger producers achieve. For example, Walton could buy the handlebars for $36 each;
they cost $39 each to make. The following is a detailed breakdown of current production costs.
Item
Unit-level costs
Materials
Labor
Overhead
Allocated facility-level costs
Total
Per Unit
Unit Cost
$16
9
3
11
$39
Total relevant cost
Do you agree with the president's conclusion?
After seeing these figures, Walton's president remarked that it would be foolish for the company to continue to produce the
handlebars at $39 each when it can buy them for $36 each.
Required
Calculate the total relevant cost. Do you agree with the president's conclusion?
Total…
Chapter 13 Solutions
Survey Of Accounting
Ch. 13 - Prob. 1QCh. 13 - Prob. 2QCh. 13 - Prob. 3QCh. 13 - Prob. 4QCh. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Prob. 7QCh. 13 - Prob. 8QCh. 13 - Prob. 9QCh. 13 - Prob. 10Q
Ch. 13 - Prob. 11QCh. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - Prob. 17QCh. 13 - Prob. 18QCh. 13 - Prob. 19QCh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Exercise 6-5AOpportunity costs Norman Dowd owns...Ch. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Exercise 6-11AEstablishing price for an...Ch. 13 - Exercise 6-12AOutsourcing decision with...Ch. 13 - Exercise 6-13AOutsourcing decision affected by...Ch. 13 - Prob. 14ECh. 13 - Exercise 6-15ASegment elimination decision Dudley...Ch. 13 - Prob. 16ECh. 13 - Exercise 6-17AAsset replacementopportunity cost...Ch. 13 - Prob. 18ECh. 13 - Exercise 6-19A Asset replacement decision Mead...Ch. 13 - Exercise 6-20A Asset replacement decision Kahn...Ch. 13 - Exercise 6-21A Annual versus cumulative data for...Ch. 13 - Problem 6-23A Context-sensitive relevance Required...Ch. 13 - Problem 6-24A Context-sensitive relevance...Ch. 13 - Problem 6-25A Effect of order quantity on special...Ch. 13 - Problem 6-26A Effects of the level of production...Ch. 13 - Problem 6-28A Eliminating a segment Western Boot...Ch. 13 - Effect of activity level and opportunity cost on...Ch. 13 - Problem 6-30A Comprehensive problem including...Ch. 13 - Prob. 29PCh. 13 - ATC 6-1 Business Application Case Analyzing...Ch. 13 - ATC 6-2 Group Assignment Relevance and cost...Ch. 13 - Prob. 3ATCCh. 13 - Prob. 4ATCCh. 13 - Prob. 5ATC
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