Question
In: Accounting
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 affected by the decision to make or buy Part A. (1) An outside supplier has offered to sell the company all of these parts it needs for $57 a unit. What will be the change in Barnes Company's net income if it accepts this offer? (2) Now, if the company accepts this offer as described in question (1), the facilities now being used to make Part A could be used to make 10,000 units of Part B per year. The contribution margin on Part B would be $5/unit. What will be the change in Barnes Company's net income if it accepts this offer as described in question (1)?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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...
Foto Company makes 10,000 units per year of a part it uses in the products it...
Foto Company makes 10,000 units per year of a part it uses in
the products it manufactures. The unit product cost of this part is
computed as follows:
Direct
materials
$
13.00
Direct labor
20.60
Variable manufacturing
overhead
2.80
Fixed manufacturing
overhead
10.70
Unit product cost
$
47.10
An outside supplier has offered to sell the company all of these
parts it needs for $42.10 a unit. If the company accepts this
offer, the facilities now being used to make...
ABC Company makes 40,000 units per year of a part it uses in the products it...
ABC Company makes 40,000 units per year of a part it uses in
the
products it manufactures. The per unit product cost of this
part
is shown below:
direct materials .............. $15.30
direct labor .................. 24.70
variable overhead ............. 2.10
fixed overhead ................ 27.40
total ......................... $69.50
An outside supplier has offered to sell ABC Company 40,000
units
of this part a year for $66.10 per unit. If ABC Company
accepts
this offer, the facilities now being used to make...
Aholt Company makes 40,000 units per year of a part it uses in the products it...
Aholt Company makes 40,000 units per year of a part it uses in
the products it manufactures. The unit product cost of this part is
computed as follows:
Direct materials
$11.30
Direct labour
22.70
Variable manufacturing overhead
1.20
Fixed manufacturing overhead
24.70
Unit product cost
$59.90
An outside supplier has offered to sell the company all of these
parts it needs for $46.20 a unit. If the company accepts this
offer, the facilities now being used to make the part...
Foulds Company makes 13,000 units per year of a part it uses in the products it...
Foulds Company makes 13,000 units per year of a part it uses in
the products it manufactures. The unit product cost of this part is
computed as follows:
Direct
materials
$
12.70
Direct labor
20.30
Variable
manufacturing overhead
2.50
Fixed manufacturing
overhead
10.40
Unit product
cost
$
45.90
An outside supplier has offered to sell the company all of these
parts it needs for $41.80 a unit. If the company accepts this
offer, the facilities...
Foto Company makes 50,000 units per year of a part it uses in the products it...
Foto Company makes 50,000 units per year of a part it uses in the products
it manufactures. The cost per unit of this part is shown below:
direct materials .............. $13.00
direct labor .................. 10.10
variable overhead ............. 6.50
allocated fixed overhead ...... 8.60
total ......................... $38.20
An outside supplier has offered to sell Foto Company 50,000 of these parts
for $31.60 per unit. If the company accepts this offer, the facilities now
being used to make the part could...
Foto Company makes 12,000 units per year of a part it uses in the products it...
Foto Company makes 12,000 units per year of a part it uses in
the products it manufactures. The unit product cost of this part is
computed as follows:
Direct materials
$
12.80
Direct labor
20.40
Variable manufacturing overhead
2.60
Fixed manufacturing overhead
10.50
Unit product cost
$
46.30
An outside supplier has offered to sell the company all of these
parts it needs for $41.90 a unit. If the company accepts this
offer, the facilities now being used to make...
Foto Company makes 14,000 units per year of a part it uses in the products it...
Foto Company makes 14,000 units per year of a part it uses in
the products it manufactures. The unit product cost of this part is
computed as follows:
Direct
materials
$
13.60
Direct labor
21.20
Variable manufacturing
overhead
3.40
Fixed manufacturing
overhead
11.30
Unit product cost
$
49.50
An outside supplier has offered to sell the company all of these
parts it needs for $42.70 a unit. If the company accepts this
offer, the facilities now being used to make...
1. A) If a company makes 100 units of product, the allocated fixed cost per unit...
1.
A) If a company makes 100 units of product, the allocated fixed
cost per unit is $5
and the variable cost per unit is $6. What will be the per-unit
total cost (fixed plus
variable cost) if the company makes 200 units?
B) At a production and sales level of 1,000 units, the company’s
costs are as follows:
Variable manufacturing costs per unit $20
Allocated fixed manufacturing cost per unit $10
Variable selling costs per unit $ 5
Allocated...
Kramer Company makes 4,600 units per year of a part called an axial tap for use...
Kramer Company makes 4,600 units per year of a part called an
axial tap for use in one of its products. Data concerning the unit
production costs of the axial tap follow:
Direct
materials
$
41
Direct labor
16
Variable
manufacturing overhead
14
Fixed manufacturing
overhead
20
Total manufacturing
cost per unit
$
91
An outside supplier has offered to sell Kramer Company all of
the axial taps it requires. If Kramer Company decided to
discontinue making the...
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