1. Make-or-Buy Decision for a Service Company
The Theater Arts Guild of Dallas (TAG-D) employs five people in
its Publication Department. These people lay out pages for
pamphlets, brochures, magazines, and other publications for the
TAG-D productions. The pages are delivered to an outside company
for printing. The company is considering an outside publication
service for the layout work. The outside service is quoting a price
of $13 per layout page. The budget for the Publication Department
for the current year is as follows:
Salaries | $224,000 |
Benefits | 36,000 |
Supplies | 21,000 |
Office expenses | 39,000 |
Office depreciation | 28,000 |
Computer depreciation | 24,000 |
Total | $372,000 |
The department expects to lay out 24,000 pages for the current year. The Publication Department office space and equipment would be used for future administrative needs, if the department's function were purchased from the outside.
a. Prepare a differential analysis dated February 22 to determine whether TAG-D should lay out pages internally (Alternative 1) or purchase layout services from the outside (Alternative 2). If an amount is zero, enter "0".
2.
Differential Analysis for Machine Replacement
Boyer Digital Components Company assembles circuit boards by
using a manually operated machine to insert electronic components.
The original cost of the machine is $90,600, the accumulated
depreciation is $36,200, its remaining useful life is five years,
and its residual value is negligible. On May 4 of the current year,
a proposal was made to replace the present manufacturing procedure
with a fully automatic machine that has a purchase price of
$188,400. The automatic machine has an estimated useful life of
five years and no significant residual value. For use in evaluating
the proposal, the accountant accumulated the following annual data
on present and proposed operations:
Present Operations |
Proposed Operations |
|||
Sales | $287,200 | $287,200 | ||
Direct materials | $97,800 | $97,800 | ||
Direct labor | 68,000 | — | ||
Power and maintenance | 6,300 | 33,500 | ||
Taxes, insurance, etc. | 2,300 | 7,500 | ||
Selling and administrative expenses | 68,000 | 68,000 | ||
Total expenses | $242,400 | $206,800 |
a. Prepare a differential analysis dated May 4 to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss.
1. Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five...
1. Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of $13 per layout page. The budget for the Publication Department for the current...
Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of $19 per layout page. The budget for the Publication Department for the current year...
Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service quoting a price of $15 per layout page. The budget for the Publication Department for the current year is...
Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of $13 per layout page. The budget for the Publication Department for the current year...
Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of $18 per layout page. The budget for the Publication Department for the current year...
Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of $18 per layout page. The budget for the Publication Department for the current year...
Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of $19 per layout page. The budget for the Publication Department for the current year...
Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service quoting a price of $13 per layout page. The budget for the Publication Department for the current year is...
Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service quoting a price of $17 per layout page. The budget for the Publication Department for the current year is...
Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service quoting a price of $18 per layout page. The budget for the Publication Department for the current year is...