Answer-
Financial advantage of making | $ 105,000 |
Working
Total Cost of Buying | $ 763,000 |
Total Cost of manufacturing | $ 658,000 |
Financial advantage of making | $ 105,000 |
.
Differential Analysis | ||
Make | Buy | |
Direct material | $ 350,000 | |
Direct labor | $ 154,000 | |
Variable Overheads | $ 49,000 | |
Fixed overhead | $ 105,000 | |
Purchase price | $ 763,000 | |
Total relevant Cost | $ 658,000 | $ 763,000 |
.Unavoidable Fixed Cost will not be considered because they will occur even if no production is done.
Supervisor salary is relavant cost even though it’s a fixed cost . Because this cost is avoidable.
The Amount of rent would remain the same whichever option is selected so its also a Irrelevant cost.
Futura Company purchases the 70,000 starters that it installs in its standard line of farm tractors...
Futura Company purchases the 70,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $10.90 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $10.80 as shown below: Direct materials Direct labor...
Futura Company purchases the 70,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.00 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $12.50 as shown below: Direct materials Direct labor...
Futura Company purchases the 70,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.80 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company’s chief engineer is opposed to making the starters because the production cost per unit is $13.50 as shown below: Per Unit Total Direct...
Futura Company purchases the 71,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $9.60 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company’s chief engineer is opposed to making the starters because the production cost per unit is $10.90 as shown below: Per Unit Total Direct...
Futura Company purchases the 65,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $10.80 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company’s chief engineer is opposed to making the starters because the production cost per unit is $11.30 as shown below: Per Unit Total Direct...
Futura Company purchases the 76.000 starters that it installs in its standard line of farm tractors from a supplier for the price of $10.90 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $11.60 as shown below. Total Per Unit $...
Futura Company purchases the 76.000 starters that it installs in its standard line of farm tractors from a supplier for the price of $10.90 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $11.60 as shown below. Total Per Unit $...
Futura Company purchases the 61,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $10.50 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company’s chief engineer is opposed to making the starters because the production cost per unit is $11.00 as shown below: Per Unit Total Direct...
Futura Company purchases the 65,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.30 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $12.30 as shown below Per Unit $ 6.00...
Futura Company purchases the 65,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.30 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $12.30 as shown below: Direct materials Direct labor...