Question

In: Accounting

Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to...

Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,240 remotes is as follows:

Direct Materials $66,560
Direct Labor 56,320
Variable Overhead 30,720
Fixed Overhead 51,200
Total 204,800

Frannie is approached by Lincoln Company which offers to make the remotes for $18 per unit. Required:

1. Compute the difference in cost between making and buying the remotes if none of the fixed costs can be avoided. What is the difference in cost per unit? What is the change in net income?

2. Compute the difference in cost between making and buying the remotes if $20,480 of the fixed costs can be avoided. What is the Difference in Cost per unit? What is the change in net income?

3. What is the change in net income if fixed cost of $20,480 can be avoided and Frannie could rent out the factory space no longer in use for $20,480?

Solutions

Expert Solution

Answer is given below

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to...
Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,340 remotes is as follows: Cost Direct materials $ 67,210 Direct labor $ 56,870 Variable overhead $ 31,020 Fixed overhead $ 51,700 Total $ 206,800 Frannie is approached by Lincoln Company which offers to make the remotes for $18 per unit. Required: 1. Compute the difference in cost between making and buying the remotes if none of the fixed costs can be avoided....
Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to...
Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,160 remotes is as follows: Cost Direct materials $ 66,040 Direct labor $ 55,880 Variable overhead $ 30,480 Fixed overhead $ 50,800 Total $ 203,200 Frannie is approached by Lincoln Company which offers to make the remotes for $18 per unit. Required: 1. Compute the difference in cost between making and buying the remotes if none of the fixed costs can be avoided....
Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to...
Frannie Fans currently manufactures ceiling fans that include remotes to operate them. The current cost to manufacture 10,240 remotes is as follows: Direct Materials $66,170 Direct Labor 55,990 Variable Overhead 30,540 Fixed Overhead 50,900 Total 203,600 Frannie is approached by Lincoln Company which offers to make the remotes for $18 per unit. Required: 1. Compute the difference in cost between making and buying the remotes if none of the fixed costs can be avoided. What is the change in net...
Carlise Corp., which manufactures ceiling fans, currently has two product lines, the Indoor and the Outdoor....
Carlise Corp., which manufactures ceiling fans, currently has two product lines, the Indoor and the Outdoor. Carlise has total overhead of $121,252. Carlise has identified the following information about its overhead activity cost pools and the two product lines: Activity Cost Pools Cost Driver Cost Assigned to Pool Quantity/Amount Consumed by Indoor Line Quantity/Amount Consumed by Outdoor Line Materials handling Number of moves $ 18,032 600 moves 320 moves Quality control Number of inspections $ 74,520 6,200 inspections 4,600 inspections...
Kipas Sdn Bhd produces ceiling fans, and is currently operating at 90% of its capacity of 100,000 fans per month.
Kipas Sdn Bhd produces ceiling fans, and is currently operating at 90% of its capacity of 100,000 fans per month. The company has just received a one-time special order from Hong Kong Trading to purchase 2,000 fans at RM110 per unit. If Kipas choose to accept this order, it has to incur an additional fixed printing cost of RM50,000 for the packaging material. The production data is as follows:Monthly Production DataUnits100,000Variable cost/unitRM80Total fixed costRM4,000,000Fixed costs per unit 4,000,000/100,000RM40 Required:a) Should...
Crowder Manufacturing Company manufactures and sells ceiling fans. Crowder incurred the following costs related to quality...
Crowder Manufacturing Company manufactures and sells ceiling fans. Crowder incurred the following costs related to quality for the year: Cost of warranty $35,000 Cost of employee quality training $27,000 Cost incurred to rework fans $18,000 Spoilage cost (net) $15,000 Cost of handling customer complaints $11,000 Depreciation cost of test equipment $ 6,000 Cost of quality circles $ 5,000 Maintenance cost of test equipment $ 3,000 Cost of retesting reworked fans $ 2,000 Cost of final testing of fans $ 1,000...
Lawrence Corporation sells two ceiling fans, Deluxe and Basic. Current sales total 60,000 units, consist-ing of...
Lawrence Corporation sells two ceiling fans, Deluxe and Basic. Current sales total 60,000 units, consist-ing of 39,000 Deluxe units and 21,000 Basic units. Selling price and variable cost information follow. Deluxe Basic Selling price ............................................................................................$86 $74 Variable cost ............................................................................................65 41 Salespeople currently receive flat salaries that total $400,000. Management is contemplating a change to a compensation plan that is based on commissions in an effort to boost the company’s presence in the marketplace. Two plans are under consideration: Plan A:10%...
     A company, currently operating at full capacity, manufactures and sells saucepans at £2 each. Current...
     A company, currently operating at full capacity, manufactures and sells saucepans at £2 each. Current volume is 100,000 pans per annum with the following cost structure.                                  Operating Statement for year                                                                                           £     Sales (100,000 at £2)                                                200,000      less Marginal Cost      Labour                              80,000         Material                         50,000                             130,000        = Contribution                                                          70,000        Fixed Costs                                                               30,000        = Net profit                                                             £40,000        An opportunity has arisen to supply an additional 30,000 pans per annum at £1.18...
Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost...
Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below: Cost per Unit Variable costs Direct material $920 Direct labor 600 Variable overhead 300 Fixed costs Depreciation of equipment 500 Depreciation of building 250 Supervisory salaries 300 The company has an offer from Duvall Valves to produce the part for $2,000 per unit and supply 1,000 valves (the number needed in the coming year). If the company accepts...
Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost...
Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below: Cost per Unit Variable costs Direct material $920 Direct labor 600 Variable overhead 300 Fixed costs Depreciation of equipment 500 Depreciation of building 250 Supervisory salaries 300 The company has an offer from Duvall Valves to produce the part for $2,000 per unit and supply 1,000 valves (the number needed in the coming year). If the company accepts...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT