A department in the facility required 12,250 units of raw materials to produce a TV. The...

A department in the facility required 12,250 units of raw materials to produce a TV. The company is deciding wither to buy or make raw materials. The fixed and variable cost of building (manufacturing) the raw materials are $20,000 and $5, respectively. Also, the fixed and variable costs for buying the raw materials are $400 and $7, respectively. Use the breakeven analysis methods to decide if the company has to purchase or manufacture the raw materials.

Non of the above
		The company must purchase the raw materials
		The company must make the raw materials
		It will cost the company the same to make or buy the raw materials

Expert Solution

Ally Wells answered 2 years ago

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Costs Raw materials purchased $ 75,000 Direct Labor 55,000 Indirect labor 33,000 Factory equipment maintenance and depreciation 15,000 Factory rent 36,000 Factory supplies 6,000 Selling & administrative expenses 100,000 Inventories Beginning Balance Ending Balance Raw Materials $ 5,000 $20,000 Work in Process 25,000 30,000 Finished Goods 20,000 35,000 Required: Calculate the cost of raw materials used in production. Required: Calculate the cost of goods manufactured Calculate the cost of goods sold. Required: Calculate the prime costs Calculate the conversion costs.

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