Decision-making process: Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives. To prepare: A per unit analysis of the differential costs and to explain whether Company R must make or buy the sails.

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Answer 1

Question

Chapter 7, Problem 7.7E

(a)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To prepare: A per unit analysis of the differential costs and to explain whether Company R must make or buy the sails.

(b)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To determine: Whether R should make or buy the sails, if R suddenly finds an opportunity to rent out the unused capacity of its factory for $77,000 per year.

(c)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To identify: The three qualitative factors that R should consider in make or buy decisions.

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Riggs Company purchases sails and produces sailboats. It currently produces 1,200 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Riggs purchases sails at $250 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $100 for direct materials, $80 for direct labor, and $90 for overhead. The $90 overhead is based on $78,000 of annual fixed overhead that is allocated using normal capacity.The president of Riggs has come to you for advice. “It would cost me $270 to make the sails,” she says, “but only $250 to buy them. Should I continue buying them, or have I missed something?” (B) If Riggs suddenly finds an opportunity to rent out the unused capacity of its factory for $77,000 per year, would your answer to part (a) change?

Riggs Company purchases sails and produces sailboats. It currently produces 1,200 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Riggs purchases sails at $250 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $100 for direct materials, $80 for direct labor, and $90 for overhead. The $90 overhead is based on $78,000 of annual fixed overhead that is allocated using normal capacity.The president of Riggs has come to you for advice. “It would cost me $270 to make the sails,” she says, “but only $250 to buy them. Should I continue buying them, or have I missed something?” (a) Prepare a per unit analysis of the differential costs. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Riggs Company purchases sails and produces sailboats. It currently produces 1,230 sailboats per year, operating at normal capacity. which is about 80% of full capacity. Riggs purchases sails at $255 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $94 for direct materials, $80 for direct labor, and $90 for overhead. The $90 overhead is based on $78,720 of annual fixed overhead that is allocated using normal capacity. The president of Riggs has come to you for advice. "It would cost me $264 to make the sails," she says, "but only $255 to buy them. Should I continue buying them, or have I missed something?" (a) Prepare a per unit analysis of the differential costs. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Make Sails Direct material $ Direct labor Variable overhead Purchase price Buy Sails $ Net Income Increase (Decrease) $ Total…

Answer 2

Question

Chapter 7, Problem 7.7E

(a)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To prepare: A per unit analysis of the differential costs and to explain whether Company R must make or buy the sails.

(b)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To determine: Whether R should make or buy the sails, if R suddenly finds an opportunity to rent out the unused capacity of its factory for $77,000 per year.

(c)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To identify: The three qualitative factors that R should consider in make or buy decisions.

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Answer 3

Question

Chapter 7, Problem 7.7E

(a)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To prepare: A per unit analysis of the differential costs and to explain whether Company R must make or buy the sails.

(b)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To determine: Whether R should make or buy the sails, if R suddenly finds an opportunity to rent out the unused capacity of its factory for $77,000 per year.

(c)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To identify: The three qualitative factors that R should consider in make or buy decisions.

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Answer 4

Question

Chapter 7, Problem 7.7E

(a)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To prepare: A per unit analysis of the differential costs and to explain whether Company R must make or buy the sails.

(b)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To determine: Whether R should make or buy the sails, if R suddenly finds an opportunity to rent out the unused capacity of its factory for $77,000 per year.

(c)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To identify: The three qualitative factors that R should consider in make or buy decisions.

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Answer 5

Chapter 7, Problem 7.7E

(a)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To prepare: A per unit analysis of the differential costs and to explain whether Company R must make or buy the sails.

(b)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To determine: Whether R should make or buy the sails, if R suddenly finds an opportunity to rent out the unused capacity of its factory for $77,000 per year.

(c)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To identify: The three qualitative factors that R should consider in make or buy decisions.

Answer 6

Chapter 7, Problem 7.7E

(a)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To prepare: A per unit analysis of the differential costs and to explain whether Company R must make or buy the sails.

Answer 7

Chapter 7, Problem 7.7E

(a)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To prepare: A per unit analysis of the differential costs and to explain whether Company R must make or buy the sails.

Answer 8

(b)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To determine: Whether R should make or buy the sails, if R suddenly finds an opportunity to rent out the unused capacity of its factory for $77,000 per year.

Answer 9

(b)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To determine: Whether R should make or buy the sails, if R suddenly finds an opportunity to rent out the unused capacity of its factory for $77,000 per year.

Answer 10

(c)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To identify: The three qualitative factors that R should consider in make or buy decisions.

Answer 11

(c)

To determine

Decision-making process:

Decision making can be defined as the process of making choices through the identification of a decision, collecting information, and assessing alternative re Explanations. The implementation of a step-by-step process of decision making helps in making deliberate and effective decisions through proper organization of relevant information and defining alternatives.

To identify: The three qualitative factors that R should consider in make or buy decisions.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 7 - What steps are frequently involved in managements...Ch. 7 - Prob. 2Q Ch. 7 - Incremental analysis involves the accumulation of...Ch. 7 - Sydney Greene asks for your help concerning the...Ch. 7 - What data are relevant in deciding whether to...Ch. 7 - Prob. 6Q Ch. 7 - Prob. 7Q Ch. 7 - Prob. 8Q Ch. 7 - What are joint products? What accounting issue...Ch. 7 - Prob. 10Q

Solution Summary: The author defines decision-making as the process of making decisions through the identification of a decision, collecting information, and assessing alternative re Explanations.

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