Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The...

Question

Question

Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $1

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

	Make	Buy
Variable costs	73000
Avoidable fixed costs	21000
Purchase cost		148000
Opportunity cost	13000
Total relevant cost	107000	148000

Difference in favor of making	41000	=148000-107000

$41,000 greater than if the company bought the part
Option D is correct

Workings:
Avoidable fixed costs	21000	=70000*30%
Purchase cost	148000	=40000*3.70

Add a comment

Answer 2

Similar Homework Help Questions

Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The...

Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 43,000 parts is $140,000, which includes fixed costs of 560,000 and variable costs of $71,000 The company can buy the part from an outside Supplier for $3 60 per unit and avoid 30% of the fixed costs Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The...

Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 42,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.50 per unit, and avoid 30% of the fixed costs. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold...
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The...

Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $140,000, which includes forced costs of $72.000 and variable costs of $60,000. The company can buy the part from an outside supplier for $4.00 per unit, and avoid 30% of the food costs Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold...

#2 Blue Ridge Bicycles a standard part in the manufacture of veral of its bikes. The cost of producing 43.000...

#2 Blue Ridge Bicycles a standard part in the manufacture of veral of its bikes. The cost of producing 43.000 part avoid 30% of the fixed costs. 510,000, which includes forced costs of $73,000 and variable costs of $66.000. By outsourcing the part, the compartycat Blue Ridge Bicydes buys the part what is the most Blue Ridge Bicycles can spend per unit so that operating income equals the operating income from making the part? (Round the final to the nearestent)...
Question Help Harvey Automobiles uses a standard part in the manufacture of several of its trucks....

Question Help Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $140,000, which includes fued costs of $50,000 and variable costs of $90,000 The company can buy the part from an outside supplier for $3.50 per unit, and avoid 30% of the fixed costs. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be...
Question Help Harvey Autiomobiles uses a standard part in the manufacture of several of its trucks....

Question Help Harvey Autiomobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 90,000 parts is $140,000, which includes fixed cost of$50,000 and variable costs of $90 000 The company can buy the part from an outside supplier for$350 per unit and avoid 30% of the fixed costs Assume that faclory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold...

#20 The cost of producing 42,000 paris $138,000, which includes fonds of 570.000 and variables of $60.000 The compan...

#20 The cost of producing 42,000 paris $138,000, which includes fonds of 570.000 and variables of $60.000 The company can buy the par Blue Ridge Bicycles uses a standard part in the manufacture of w al k outside supplier for $370 and 30% of the feed costs Blue Ridge Bicycles the part how chwili perting income be? OA $91.000 g r than the company bought the part OB. 566,400 gr a n the company bought the part OC. 391.000 less...
Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total...

Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 33,000 parts is $105,000, which includes fixed costs of $50,000 and variable costs of $55,000. The company can buy the part from an outside supplier for $1 per unit and avoid 30% of the fixed costs. Assume that the company can use the freed manufacturing space to make another product that can earn a profit of $15,000. If Voltaic outsources, what...
30 Part P40 is a part used in the production of air conditioners at Jackson Corporation....

30 Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following costs and data relate to the production of Part P40: Number of parts produced annually 27,000 Fixed costs $45,000 Variable costs $71.000 Total cost to produce $116,000 Jackson Corporation can purchase the part from an outside supplier for $4.71 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. Assume that factory space freed up...

Part P40 is a part used in the production of air conditioners at Jackson Corporation. The...

Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following costs and data relate to the production of Part P40: Number of parts produced annually 23,000 Fixed costs $43,000 Variable costs $71,000 Total cost to produce $114,000 Jackson Corporation can purchase the part from an outside supplier for $4.67 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. Assume that factory space freed up by...

Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The...

Homework Answers