Answer:
Make | buy | Differential | |
Direct materials | 35 | 35 | |
Direct labor | 16 | 16 | |
Variable overhead | 24 | 24 | |
fixed overhead(20*40%) | 20 | 8 | 12 |
buy | 90 | -90 | |
total | 95 | 98 | -3 |
Alternative | Savings | ||
make the part | $3 | Per unit |
Make vs. Buy (Sourcing Decision) Eggers Company needs 20,000 units of a part to use in...
11-30 Relevant Cost Exercises Each of the following situations is independent: a. Make or Buy Terry Inc. manufactures machine parts for aircraft engines. CEO Bucky Walters is considering an offer from a subcontractor to provide 2,000 units of product OP89 for $120,000. If Terry does not purchase these parts from the subcontractor, it must continue to produce them in-house with these costs: Cost per Unit Direct materials $28 Direct labor 18 Variable overhead 16 Allocated fixed overhead 4 Required 1....
Make-or-Buy, Traditional Analysis Wehner Company is currently manufacturing Part ABS-43, producing 57,500 units annually. The part is used in the production of several products made by Wehner. The cost per unit for ABS-43 is as follows: Direct materials $44.15 Direct labor 10.90 Variable overhead 3.00 Fixed overhead 4.70 Total $62.75 Of the total fixed overhead assigned to ABS-43, $15,180 is direct fixed overhead (the annual lease cost of machinery used to manufacture Part ABS-43), and the remainder is common fixed...
Make-or-Buy, Traditional Analysis Wehner Company is currently manufacturing Part ABS-43, producing 54,600 units annually. The part is used in the production of several products made by Wehner. The cost per unit for ABS-43 is as follows Direct materials Direct labor Variable overhead Fixed overhead $42.10 9.00 3.30 3.65 $58.05 Total Of the total fixed overhead assigned to ABS-43, $13,049 is direct fixed overhead (the annual lease cost of machinery used to manufacture Part ABS-43), and the remainder is common fixed...
Make-or-Buy Decision, Alternatives, Relevant Costs Each year, Basu Company produces 13,000 units of a component used in microwave ovens. An outside supplier has offered to supply the part for $1.31. The unit cost is: Direct materials $0.89 Direct labor 0.27 Variable overhead 0.07 Fixed overhead 2.10 Total unit cost $3.33 Required: 1. What are the alternatives for Basu Company? Make the part in house or buy the part externally 2. Assume that none of the fixed cost is avoidable. List...
Blasingham Company is currently manufacturing Part Q108, producing 35,000 units annually. The part is used in the production of several products made by Blasingham. The cost per unit for Q108 is as follows: Direct materials $ 6.00 Direct labor 2.00 Variable overhead 1.50 Fixed overhead 3.50 Total $13.00 Of the total fixed overhead assigned to Q108, $77,000 is direct fixed overhead (the lease of production machinery and salary of a production line supervisor—neither of which will be needed if the...
Exercise 11-11 Make or Buy Decision (LO11-3] Han Products manufactures 37,000 units of part 5-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: 2.0 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part An outside supplier has offered to sell 37000 units of part 5-6 each year to Han Products for $19 per part. If Han Products accepts this offer, the facilities...
Wehner Company is currently manufacturing Part ABS-43, producing 57,800 units annually. The part is used in the production of several products made by Wehner. The cost per unit for ABS-43 is as follows: Direct materials $47.50 Direct labor 10.75 Variable overhead 3.30 Fixed overhead 4.30 Total $65.85 Of the total fixed overhead assigned to ABS-43, $13,121 is direct fixed overhead (the annual lease cost of machinery used to manufacture Part ABS-43), and the remainder is common fixed overhead. An outside...
Make-or-Buy Decision Fremont Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $56 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 37% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $30 Direct labor 20 Factory overhead (37% of direct labor) 7.4 Total cost per unit If Fremont Computer Company...
Make-or-Buy Decision Fremont Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $55 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 37% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $24 Direct labor 21 Factory overhead (37% of direct labor) 7.77 Total cost per unit $52.77 If Fremont Computer...
Make-or-Buy Decision Somerset Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $56 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 44% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $24 Direct labor 19 Factory overhead (44% of direct labor) 8.36 Total cost per unit $51.36 If Somerset Computer...