Question

Cost accounting math. Please solve it with proper explanation:

(a) Sharp Corporation produces 8,000 parts each year, which are used in the production of one of its products.

The unit product cost of a part is $36, computed as follows:

Variable production cost   $16

Fixed production cost     $20

Unit product cost         $36

The parts can be purchased from an outside supplier for only $28 each. The space in which the parts are now produced would be idle and fixed production costs would be reduced by one-fourth. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be: __________

b) Chavin Company had the following results during August: net operating income, $220,000; turnover, 5; and ROI 25%. Chavin Company's average operating assets were: _____

c) The following data has been provided for a company's most recent year of operations:

Return on investment 20 %

Average operating assets $ 100,000

Minimum required rate of return 15 %

the residual income for the year was closest to: ___________

Answer 1