Question

Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the...

Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 16,900 units of the part that are needed every year. Per Unit Direct materials $ 4.10 Direct labor $ 4.80 Variable overhead $ 7.80 Supervisor's salary $ 8.50 Depreciation of special equipment $ 9.10 Allocated general overhead $ 6.10 An outside supplier has offered to make the part and sell it to the company for $34.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $22,900 of these allocated general overhead costs would be avoided. Required: a. Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the company. b. Which alternative should the company choose?

0 0
Add a comment Improve this question Transcribed image text
✔ Recommended Answer
Answer #1

,1.

Make Decision Buy Decision
Direct material $69,290 (16,900*4.10)
Direct labor 81,120 (16,900*4.80)
Variable overhead 131,820 (16,900*7.80)
Supervisor salary 143,650 (16,900*8.50)
Depreciation of special equipment 153,790 (16,900*9.10) 153,790
Allocated general overhead 103,090 (16,900*6.10) 80,190 (103,090-22,900)
Purchase price 574,600 (16,900*34)
Total $682,760 $808,580

Company should continue with Make decision as its total cost is less than The Buy decision

Add a comment
Know the answer?
Add Answer to:
Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Similar Homework Help Questions
  • Part 467 is used in one of Broce Corporation's products. The company's Accounting Department reports the...

    Part 467 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 16,000 units of the part that are needed every year. Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $ 2.90 $ 3.90 $ 6.70 $ 7.20 $ 8.30 $ 5.40 An outside supplier has offered to make the part and sell it to the company for $28.00 each. If this...

  • TB Problem Qu. 12-182 Part U67 is used in one of Broce Corporation's ... Part U67...

    TB Problem Qu. 12-182 Part U67 is used in one of Broce Corporation's ... Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 14,900 units of the part that are needed every year. Per Unit Direct materials $ 1.80 Direct labor $ 2.80 Variable overhead $ 5.60 Supervisor's salary $ 6.10 Depreciation of special equipment $ 7.20 Allocated general overhead $ 4.30 An outside supplier has offered to...

  • TB Problem Qu. 12-182 Part U67 is used in one of Broce Corporation's ... Part U67...

    TB Problem Qu. 12-182 Part U67 is used in one of Broce Corporation's ... Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 15,900 units of the part that are needed every year. Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $ 2.80 $ 3.80 $ 6.60 $ 7.10 $ 8.20 $ 5.30 An outside supplier has offered to...

  • Part 043 is used in one of Scheet Corporation's products. The company's Accounting Department reports the...

    Part 043 is used in one of Scheet Corporation's products. The company's Accounting Department reports the following costs of producing the 15.100 units of the part e nded every year $300 Direct mators Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Alocated general overhead $5 80 $6 30 $450 An outside supplier has offered to make the part and sell it to the company for $2400 cachIf this offer is accepted the supervisor's salary and all of the...

  • Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the...

    Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the following costs of producing the 8,900 units of the part that are needed every year. Per Unit Direct materials $ 8.20 Direct labor $ 4.60 Variable overhead $ 9.10 Supervisor's salary $ 3.40 Depreciation of special equipment $ 2.90 Allocated general overhead $ 1.60 An outside supplier has offered to make the part and sell it to the company for $28.00 each. If this...

  • TB Problem Qu. 12-182 Part 467 is used in one of Broce Corporation's ... Part 467...

    TB Problem Qu. 12-182 Part 467 is used in one of Broce Corporation's ... Part 467 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 14,900 units of the part that are needed every year. Per Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Unit $ 1.80 $ 2.80 $ 5.60 $ 6.10 $ 7.20 $ 4.30 An outside supplier has offered to...

  • Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the...

    Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the following costs of producing the 7,400 units of the part that are needed every year. Per Unit Direct materials $ 8.20 Direct labor $ 4.60 Variable overhead $ 9.10 Supervisor's salary $ 3.50 Depreciation of special equipment $ 3.00 Allocated general overhead $ 1.60 An outside supplier has offered to make the part and sell it to the company for $29.00 each. If this...

  • Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the...

    Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the following costs of producing the 9,500 units of the part that are needed every year. Per Unit Direct materials $ 6.30 Direct labor $ 3.50 Variable overhead $ 6.90 Supervisor's salary $ 2.60 Depreciation of special equipment $ 2.20 Allocated general overhead $ 1.20 An outside supplier has offered to make the part and sell it to the company for $23.00 each. If this...

  • Part S51 is used in one of Haberkorn Corporation's products. The company makes 12,000 units of...

    Part S51 is used in one of Haberkorn Corporation's products. The company makes 12,000 units of this part each year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit $6.30 Direct materials Direct labor $5.70 $4.80 Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead $7.00 $8.60 $7.20 An outside supplier has offered to produce this part and sell it to the company for $37.70 each. If...

  • Q1: Masse Corporation uses part G18 in one of its products. The company's Accounting Department reports...

    Q1: Masse Corporation uses part G18 in one of its products. The company's Accounting Department reports the following costs of producing the 16,000 units of the part that are needed every year. Per Unit Direct materials..... $2.90 Direct labor $3.90 Variable overhead. $6.70 Supervisor's salary ................. $7.20 Depreciation of special equipment........ $8.30 Allocated general overhead. $5.40 An outside supplier has offered to make the part and sell it to the company for $28.00 each. If this offer is accepted, the...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT