Question

20. Chapman Company manufactures widgets Embrse Compare with a proposal to sell the company widgets et a price $179 Chapman is currently making the one in G are associated with this part of the process when 100.000 Direct materials Direct labor Manufacturing overhead r 100 e company has approach Vents in its own factory. The following 100.000 units are product $ 46,500 43,500 60.000 us Total no longer produced by Chaprnan. From Chapman's point o 24,000 of costs that will be limited n cremental cost or savings if the widgets are boug e the The manufacturing overhead consists of 324 components are no longer produced by much is the incremental cost or saving a. $25,000 incremental savings b. $11,000 incremental cost C. $11,000 incremental savings d. $25,000 incremental cost Madison Industries has equival Total manufacturing costs are we bought instead of m e 30 105 has equivalent units of 8,000 for materials and for conversion con the conversion cost per unit? Tacturing costs are $128,000. Total materials costs are 596,000. How much a $2. b. $4. c. $16. d. $3. 31. Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynosos total overhead costs consist of assembly costs and inspection costs. The following information is available: Cost Titanium Aluminum Total Cost Assembly 500 mach, hours 500 mach, hours $80,000 Inspections 350 150 $100,000 2,100 labor hours 1,900 labor hours Reynoso is considering switching from one overhead rate based on labor hours to activity based costing. Total overhead costs assigned to titanium racquets, using a single overhead rate, are a. $80,000. b. $84,000 c. $100,000. d. $112,000. Sandusky Inc. has the following costs when producing 100,000 units: Variable costs $600,000 Fixed costs 900,000 An outside supplier is interested in producing the item for Sandusky. If the item is produ outside, Sandusky could use the released production facilities to make another item would generate $150,000 of net income. At what unit price would Sandusky acces outside supplier's offer if Sandusky wanted to increase net income by $120,000? 1. $8.70 $6.30 $7.50 $5.70

Answer 1

Savings = Avoidable cost of making – cost of buying

= 46,500+43,500+24,000 – 125,000

= -$11000

i.e. B $11,000 incremental cost

Conversion cost per unit = (Total manufacturing cost – material cost)/Equivalent units

= (128,000-96,000)/8,000

= $4 per unit

i.e. b

31.Assigned to Titanium based on single rate = (100,000+60,000)*2100/4000

= $84,000

i.e. b

Unit price = Variable cost of making+ Income from another product – desired increase in income

= (600,000+150,000-120,000)/100,000

= $6.30

i.e. b