ortune Company can produce 100 units of a component part of its product with the following...

ortune Company can produce 100 units of a component part of its product with the following costs: Variable manufacturing costs: $37,500 Fixed overhead costs: $11,000 Fortune can purchase 100 units of this component part from an outside vendor for $44,000. In doing so, fixed costs of $6,000 can be avoided. What decision should Fortune make? Make and save $500. Buy and save $500. Make and save $2,500. Buy and save $6,500.

Solutions

Expert Solution

Make and save $500

	Make	Buy	Net Income Increase (Decrease)
Variable manufacturing costs	37,500	-	(37,500)
Fixed overhead costs	6,000	-	(6,000)
Purchase price	-	44,000	44,000
Total annual cost	43,500	44,000	500

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

1.Sheffield Corp. can produce 100 units of a component part with the following costs: Direct Materials...

1.Sheffield Corp. can produce 100 units of a component part with the following costs: Direct Materials $20000 Direct Labor 4500 Variable Overhead 14000 Fixed Overhead 11000 If Sheffield Corp. can purchase the component part externally for $45000 and only $4000 of the fixed costs can be avoided, what is the correct make-or-buy decision? 2.Sheffield Corp. reported the following information for the current year: Sales (56000 units) $1120000, direct materials and direct labor $560000, other variable costs $56000, and fixed costs...

Appex company can produce 4,000 units of a product at 100% capacity. Following information is abailable...

Appex company can produce 4,000 units of a product at 100% capacity. Following information is abailable from its records: Units produced 2800 3600 power 1800 2000 repair and maintenance 500 560 indirect labor 700 900 consumable stores 1400 1800 inspection 200 240 depreciation 1400 1400 salary 1000 1000 Direct Material cost $1 per unit Direct wage cost $4 per hour Rate of the prodcution per hour is 10 units You are required to compute the cost of the production at...

a) A company can sell all the units it can produce of either Product A or...

a) A company can sell all the units it can produce of either Product A or Product B but not both. Product A has a unit contribution margin of $16 and takes two machine hours to make and Product B has a unit contribution margin of $30 and takes three machine hours to make. If there are 5,000 machine hours available to manufacture a product, income will be $10,000 more if Product A is made. $10,000 less if Product B...

Suppose a profit-maximizing firm can produce 100 units of a hypothetical product, wendals (selling at a...

Suppose a profit-maximizing firm can produce 100 units of a hypothetical product, wendals (selling at a price of $1 per unit), by combining labor, land, capital, and entrepreneurial ability in each of the four ways shown in the table below. Assume further that the firm can hire labor at $6 per unit, capital at $4 per unit, and entrepreneurship at $2 per unit. TECHNIQUES A B C LABOR 4 6 8 LAND 4 3 CAPITAL 5 4 ENTREPRENEURSHIP 1...

If Blue country uses it resources to produce q-tips, it can produce 100 units. For the...

If Blue country uses it resources to produce q-tips, it can produce 100 units. For the same resources, Blue country could choose to produce 25 units of pens. For Green country, it is either 90 units of q-tips or 30 units of pens. Alright, first of all, who has the absolute advantage in q-tips, pens? Who has the comparative advantage in q-tips, pens? Should this countries trade? If so, at what “price” range?

In 2018, X Company expects to produce and sell 66,000 units of its only product for...

In 2018, X Company expects to produce and sell 66,000 units of its only product for $34.73. The following are budgeted variable costs per unit: Direct Materials $5.39 Direct Labor $5.27 Variable Overhead $4.31 Variable selling and administrative $4.32 Total $19.29 Budgeted fixed overhead for 2018 is $187,440, and budgeted fixed selling and administrative expenses are $190,740. What is X Company's budgeted contribution margin rate for 2018?

1. Test Company produces a component part included in its final product. A supplier has contacted...

1. Test Company produces a component part included in its final product. A supplier has contacted the company with an offer to provide the component part. In evaluating the offer, Test Company identified the following costs to produce the component. Direct materials $20 per unit Direct labor $15 per unit Variable overhead $12 per unit Fixed overhead $8,000 per month Test Company’s average monthly demand is 5,000 components per month. Assume that none of the fixed overhead costs are avoidable...

Suppose nation A can produce 80 units of X by using all its resources to produce...

Suppose nation A can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparative figures for nation B are 60 of X and 60 of Y. Assuming constant costs, in which product should each nation specialize? Why? Indicate the limits of the terms of trade.

Lindon Company uses 4,000 units of Part X each year as a component in the assembly...

Lindon Company uses 4,000 units of Part X each year as a component in the assembly of one of its products. The company is presently producing Part X internally at a total cost of $54,000 as follows: Direct Materials $11,000 Direct Labor 13,000 Variable Manufacturing Overhead 10,000 Fixed Manufacturing Overhead 20,000 Total Costs $54,000 An outside supplier has offered to provide Part X at a price of $11.50 per unit. If Lindon Company stops producing the part internally, one-fourth of...

Barnes Company makes 10,000 units of Part A per year. The product cost of Part A...

Barnes Company makes 10,000 units of Part A per year. The product cost of Part A is provided as follows: Direct materials………………………… $30/unit Direct labor ……………………………..$15/unit Variable manufacturing overhead……….$ 5/unit Cost of manager who will be fired if Part A is no longer produced internally ...$50,000 Depreciation per year of special equipment (with no resale value) ……......... $40,000 Other fixed manufacturing overhead for the whole company ….. ………….$100,000 The ‘Other fixed manufacturing overhead for the whole company’ will not be...

Subjects