Homework Answers
| Relevant costs are the avoidable costs | ||
| Material cost | 19,800 | |
| Labor cost | 14,400 | |
| Overhead cost | 14,400 | |
| Production Supervisor Salary | 51,000 | |
| Avoidable cost | 99,600 | |
| Note: Selling, Distribution and Allocated expenses will remain the same | ||
| b.Per unit | 5.5333 | per unit |
| BUY,since purchase cost is lower | ||
| c.Total avoidable cost is as follows: | ||
| Material cost | 24,200 | |
| Labor cost | 17,600 | |
| Overhead cost | 17,600 | |
| Production Supervisor Salary | 51,000 | |
| Avoidable cost | 110,400 | |
| Unit level cost | 5.0182 | per unit |
| Make, since production cost is lower | ||
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Jordan Chemical Company makes a variety of cosmetic products, one of which is a skin cream...
Benson Chemical Company makes a variety of cosmetic products, one of which is a skin cream...
Benson Chemical Company makes a variety of cosmetic products,
one of which is a skin cream designed to reduce the signs of aging.
Benson produces a relatively small amount (18,000 units) of the
cream and is considering the purchase of the product from an
outside supplier for $4.80 each. If Benson purchases from the
outside supplier, it would continue to sell and distribute the
cream under its own brand name. Benson’s accountant constructed the
following profitability analysis:
Identify the cost...
Vernon Chemical Company makes a variety of cosmetic products, one of which is a skin cream...
Vernon Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Vernon produces a relatively small amount (18,000 units) of the cream and is considering the purchase of the product from an outside supplier for $5.90 each. If Vernon purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Vernon's accountant constructed the following profitability analysis: Revenue (18,000 units...
Vernon Chemical Company makes a variety of cosmetic products, one of which is a skin cream...
Vernon Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Vernon produces a relatively small amount (18,000 units) of the cream and is considering the purchase of the product from an outside supplier for $5.90 each. If Vernon purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Vernon's accountant constructed the following profitability analysis: Revenue (18,000 units...
Baird Chemical Company makes a variety of cosmetic products, one of which is a skin cream...
Baird Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Baird produces a relatively small amount (17,000 units) of the cream and is considering the purchase of the product from an outside supplier for $4.70 each. If Baird purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Baird's accountant constructed the following profitability analysis: Revenue (17,000 units...
Baird Chemical Company makes a variety of cosmetic products, one of which is a skin cream...
Baird Chemical Company makes a variety of cosmetic products, one
of which is a skin cream designed to reduce the signs of aging.
Baird produces a relatively small amount (17,000 units) of the
cream and is considering the purchase of the product from an
outside supplier for $4.70 each. If Baird purchases from the
outside supplier, it would continue to sell and distribute the
cream under its own brand name. Baird’s accountant constructed the
following profitability analysis:
Identify the cost...
Stuart Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the...
Stuart Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Stuart produces a relatively small amount (14,000 units) of the cream and is considering the purchase of the product from an outside supplier for $5.70 each. If Stuart purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Stuart's accountant constructed the following profitability analysis: Revenue (14,000 units...
Problem 13-25 Effects of the level of production on an outsourcing decision LO 13-3 Benson Chemical...
Problem 13-25 Effects of the level of production on an outsourcing decision LO 13-3 Benson Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Benson produces a relatively small amount (18,000 units) of the cream and is considering the purchase of the product from an outside supplier for $4.80 each. If Benson purchases from the outside supplier, it would continue to sell and distribute the cream under...
Jordan Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine,...
Jordan Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an inexpensive calculator. The company's chief accountant recently prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calculators is between 37,000 and 71,000 units per year. $ 418,000 Revenue (38,000 units * $11.00) Unit-level variable costs Materials cost (38,000 × $3.00) Labor cost (38,000 $2.00) Manufacturing overhead...
Jordan Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine,...
Jordan Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an inexpensive calculator. The company's chief accountant recently prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calculators is between 37,000 and 71,000 units per year. $ 418,000 Revenue (38,000 units * $11.00) Unit-level variable costs Materials cost (38,000 * $3.00) Labor cost (38,000 * $2.00) Manufacturing...
Perez Bike Company makes the frames used to build its bicycles. During year 2, Perez made...
Perez Bike Company makes the frames used to build its bicycles. During year 2, Perez made 24,000 frames; the costs incurred follow. Unit-level materials costs (24,000 units x $55) Unit-level labor costs (24,000 units x $58) Unit-level overhead costs (24,000 x $10) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs Allocated portion of facility-level costs Total costs $1,320,000 1,392,000 240,000 94,000 81,400 310,000 470,000 $3,907,400 Perez has an opportunity to purchase frames for $118 each. Additional...
Benson Chemical Company makes a variety of cosmetic products,
one of which is a skin cream designed to reduce the signs of aging.
Benson produces a relatively small amount (18,000 units) of the
cream and is considering the purchase of the product from an
outside supplier for $4.80 each. If Benson purchases from the
outside supplier, it would continue to sell and distribute the
cream under its own brand name. Benson’s accountant constructed the
following profitability analysis:
Identify the cost...
Vernon Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Vernon produces a relatively small amount (18,000 units) of the cream and is considering the purchase of the product from an outside supplier for $5.90 each. If Vernon purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Vernon's accountant constructed the following profitability analysis: Revenue (18,000 units...
Vernon Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Vernon produces a relatively small amount (18,000 units) of the cream and is considering the purchase of the product from an outside supplier for $5.90 each. If Vernon purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Vernon's accountant constructed the following profitability analysis: Revenue (18,000 units...
Baird Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Baird produces a relatively small amount (17,000 units) of the cream and is considering the purchase of the product from an outside supplier for $4.70 each. If Baird purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Baird's accountant constructed the following profitability analysis: Revenue (17,000 units...
Baird Chemical Company makes a variety of cosmetic products, one
of which is a skin cream designed to reduce the signs of aging.
Baird produces a relatively small amount (17,000 units) of the
cream and is considering the purchase of the product from an
outside supplier for $4.70 each. If Baird purchases from the
outside supplier, it would continue to sell and distribute the
cream under its own brand name. Baird’s accountant constructed the
following profitability analysis:
Identify the cost...
Stuart Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Stuart produces a relatively small amount (14,000 units) of the cream and is considering the purchase of the product from an outside supplier for $5.70 each. If Stuart purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Stuart's accountant constructed the following profitability analysis: Revenue (14,000 units...
Problem 13-25 Effects of the level of production on an outsourcing decision LO 13-3 Benson Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Benson produces a relatively small amount (18,000 units) of the cream and is considering the purchase of the product from an outside supplier for $4.80 each. If Benson purchases from the outside supplier, it would continue to sell and distribute the cream under...
Jordan Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an inexpensive calculator. The company's chief accountant recently prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calculators is between 37,000 and 71,000 units per year. $ 418,000 Revenue (38,000 units * $11.00) Unit-level variable costs Materials cost (38,000 × $3.00) Labor cost (38,000 $2.00) Manufacturing overhead...
Jordan Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an inexpensive calculator. The company's chief accountant recently prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calculators is between 37,000 and 71,000 units per year. $ 418,000 Revenue (38,000 units * $11.00) Unit-level variable costs Materials cost (38,000 * $3.00) Labor cost (38,000 * $2.00) Manufacturing...
Perez Bike Company makes the frames used to build its bicycles. During year 2, Perez made 24,000 frames; the costs incurred follow. Unit-level materials costs (24,000 units x $55) Unit-level labor costs (24,000 units x $58) Unit-level overhead costs (24,000 x $10) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs Allocated portion of facility-level costs Total costs $1,320,000 1,392,000 240,000 94,000 81,400 310,000 470,000 $3,907,400 Perez has an opportunity to purchase frames for $118 each. Additional...
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