Correct Answer:
Requirement 1:
$ 12 per batch
Working:
Differential Analysis |
||
Make |
Buy |
|
Direct material |
$ 16.00 |
|
Direct labor |
$ 11.00 |
|
Variable Overhead |
$ 9.00 |
|
Outside purchase price |
$ 24.00 |
|
Total Cost |
$ 36.00 |
$ 24.00 |
Therefore: 36 – 24 = $ 12
Requirement 2:
Sell before assembly, the company will be better off by $ 3 per unit
Working:
Profit before assembly – profit after assembling product
Unassembled product (Sales price – total cost) – assembled product (Sales price – total cost)
(52-24) – (64-(24+15)
= 28 – (64- 39)
= 28 – 25
=$ 3
Requirement 3:
$ 500,000 + .60X = X
Does not express break-even point
End of answer.
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