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In: Accounting

Bancroft currently manufacture a subcomponent that is used in its main product. q supplier has offered...

Bancroft currently manufacture a subcomponent that is used in its main product. q supplier has offered to supply all the subcomponents needed at a price of $120. Bancroft currently produces 20,700 subcomponents at the following manufacturing costs.
direct materials $40
direct labor 32
variable manufacturing overhead 35
fixed manufacturing overhead 22
unit cost $129
a. if bancroft has no alternative uses for then manufacturing capacity. what would be the profit impact of buying the subcomponents?
(less or more profit)
b. if bancroft has no alternative uses for the manufacturing capacity. what would be the maximum price per unit they would be willing to pay the supplier?
(maximum price)
c. now assume bancroft would avoid 320,000 in equipment leases and salaries if the subcompomemt were purchased from the supplier. now what would be the profit impact of buying from the supplier?
(more or less profit)

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ekkarill92 answered 1 year ago
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