In this make or buy problem, you should compute the total cost of making a particular part and the total costs of buying the same part. Try following the solutions steps:

Determine the parameters of the make cost function - the variable costs per unit and the fixed costs.

Determine the fixed costs that are avoidable and the fixed costs that are unavoidable.

Determine the buy price.

Determine the alternative use of the idle resources under the buy,

Note that the question does not ask for the total make costs and the total buy costs but instead asks for the difference between the two. Make sure that you submit the answer as a positive or a negative number as instructed.
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BKF.com provides banks access to sophisticated financial information and analysis via the web, enabling them to instantly evaluate both personal and commercial loan applications. To better focus on its client services, BKF.com is considering outsourcing some of its internal functions. Its controller, Jenny Lee, suggests starting with the company's internal email system. She recently attended a conference and learned that GTE and NBC outsource their email function to companies such as Google and Yahoo. Lee began her analysis by identifying the total costs related to last month's in-house email operation, when there were 3,950 employee mailboxes:

Lee analyzed the computer hardware costs further and determined that:

41% were allocated costs that will continue even if the email system is abandoned.

20% were non-personnel direct costs that will be avoided if the email system is abandoned.

39% were monthly salaries for two, equally paid interns who worked only on the email system.

Mail.com, a leading provider of internet messaging outsourcing services, has offered to host BKF.com's email function for $14.10 per mailbox. BKF.com will still need to pay for the virus protection software, and it will need one of the interns to maintain the virus protection and quarantine suspicious emails. Also, a company has agreed to pay BKF.com $4,800 a month to use the computer storage space that will become available if BKF.com outsources its email function.

Finally, Lee estimates that 4,220 mailboxes will be required per month next year.

REQUIRED

By how much will BKF.com's monthly profits change if they decide to outsource its email function to Mail.com instead of managing the service internally?   (Note: if the buy costs are less than the make costs, enter the difference as a positive number; if the make costs are less than the buy costs, enter the difference as a negative number.)

The following is total monthly budgeted cost and activity information for the four activity centers in the billing department of Oregon Power Company:

In September, actual total costs and activity were as follows:

Required
Compute the flexible-budget variances for the following two activity cost items (round all answers to the nearest dollar and enter favorable variances as positive numbers and unfavorable variances as negative numbers):

Account Billing is....?

Green Co. constructed a machine at a total cost of $60.90 million. Construction was completed at the end of 2017 and the machine was placed in service at the beginning of 2018. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $3.30 million. At the beginning of 2021, Green decided to change to the straight-line method.

Required:
1. Ignoring income taxes, what journal entry(s) should Green record relating to the machine for 2021?
2. Suppose Green has been using the straight-line method and switches to the sum-of-the-years’-digits method. Ignoring income taxes, what journal entry(s) should Green record relating to the machine for 2021?

Irwin, Inc. constructed a machine at a total cost of $23 million. Construction was completed at the end of 2017 and the machine was placed in service at the beginning of 2018. The machine was being depreciated over a 10-year life using the straight-line method. The residual value is expected to be $3 million. At the beginning of 2021, Irwin decided to change to the sum-of-the-years’-digits method.

Ignoring income taxes, prepare the journal entry relating to the machine for 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)
  
journal entry

Record the entry relating to the machine for 2021.

A cruise ship company is considering the purchase of 3 large ships for a total cost of $2,500,000. The company is also considering the purchase of 5 small ships for a total cost of $1,400,000. Both fleets would have estimated useful lives of 20 years. The discount rate for both alternatives is 9% Information regarding these two alternatives is as follows: 3 large ships 5 small ships Annual revenues (accrued) $500,000 $380,000 Annual expenses (accrued) $200,000 $180,000 Annual cash inflows $550,000 $430,000 Annual cash outflows $222,250 $206,350 Estimated salvage value $500,000 $0 The net present value of the purchase of the 3 large ships is: Select one: a. $3,081,097 b. None of the above c. $581,097

Question 8 t The profitability index of the purchase of the 3 large ships is: Select one: a. .46 b. 1.46 c. 3.0 d. None of the above Question 9 Not yet answered Marked out of 2.00 Not flaggedFlag question Question text The annual rate of return for the 3 large ships is: Select one: a. 0% b. 5% c. 12% d. 20%

Question 10 The internal rate of return for the 3 large ships is estimated to be 12%. True or False? Select one: True False

Question 11 a 7 year discounted payback threshold, the company would accept the purchase of the 3 large ships. Select one: True False

Question 12 a 7 year simple payback threshold, the company would accept the purchase of the 5 small ships. True or False? Select one: True False

Irwin, Inc., constructed a machine at a total cost of $57 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At the beginning of 2018, Irwin decided to change to the straight-line method.

Ignoring income taxes, prepare the journal entry relating to the machine for 2018. Irwin, Inc., constructed a machine at a total cost of $57 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At the beginning of 2018, Irwin decided to change to the straight-line method.

Ignoring income taxes, prepare the journal entry relating to the machine for 2018.

Irwin, Inc., constructed a machine at a total cost of $41 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 10-year life using the straight-line method. The residual value is expected to be $3 million. At the beginning of 2018, Irwin decided to change to the sum-of-the-years’-digits method.

Ignoring income taxes, prepare the journal entry relating to the machine for 2018.

Green Co. constructed a machine at a total cost of $70 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $4 million. At the beginning of 2018, Green decided to change to the straight-line method.

Required:
1. Ignoring income taxes, what journal entry(s) should Green record relating to the machine for 2018?
2. Suppose Green has been using the straight-line method and switches to the sum-of-the-years’-digits method. Ignoring income taxes, what journal entry(s) should Green record relating to the machine for 2018?

Journal entry

1. Record the entry relating to the machine for 2018 using straight-line method

2. Record the entry relating to the machine for 2018 using sum-of-the year's digits method

The production manager of a clothing manufacturer estimates that the total annual cost of producing men’s suits is given by the equation: C = 5,000 + 4,100Q – 4.4Q2 + .004Q3. What is the minimum price the firm can accept to not shut down in the short run? Hint: Write your answer to two decimal places.

A firm produces 100 units of good A at a total cost of $1,500 and separately 200 units of good B at a cost of $2,000. By combining the production of A and B, it is possible to produce the same quantities of A and B respectively at a combined total cost of $2,250. Compute the economies of scope experienced by this firm. Hint: Write your answer to two decimal places.

In the case, Jamie put together a total cost for the first order of specialty candles by adding up all of the direct material, direct labor, and allocated MOH; in other words, he used absorption costing. This is the method commonly discussed in textbooks because it is also the method required by GAAP for financial reporting purposes. However, there are several other methods for allocating costs to a product or order:

Variable Manufacturing Cost. This method of tracking costs includes only DM, DL, and the variable portion of MOH. No fixed manufacturing costs or selling and administrative (S&A) costs are included

Total Variable Cost. This method of tracking costs includes DM, DL, variable MOH, and variable S&A. However, fixed costs are still omitted

Full cost. This method of tracking costs includes all of the costs of the business, including all S&A costs

Discuss the pros and cons of each of the four costing methods. Which method do you think Wedge should use for its new line of specialty candles? Defend your answer.