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Chapter 10 204 PRACTICE TEST PROBLEM 1 Bayi MAKE The management of Garvin Industries is evaluating...
Sard Inc is considering whether to continue to make a component or to buy it from...
Sard Inc is considering whether to continue to make a component or to buy it from an outside supper. The company uses 12.600 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows Direct materials Direct labor Variable facturing overhead Fixed facturing overhead Unit product cost Assume that direct laboris a variable cost of the fored manufacturing overhead 15 is dat if the component were bought from...
Parsons Plumbing & Heating manufactures thermostats that it uses in several of its products. Management is...
Parsons Plumbing & Heating manufactures thermostats that it uses in several of its products. Management is considering whether to continue manufacturing the thermostats or to buy them from an outside source. The following information is available. 1. The company needs 80,000 thermostats per year. Thermostats can be purchased from an outside supplier at a cost of $6 per unit. 2. The cost of manufacturing thermostats is $7.50 per unit, computed as follows. Direct materials $ 156,000 Direct labor 132,000 Manufacturing...
Ren company manufactures 5,000 units of processor chip, A-403, each year for use on its production...
Ren company manufactures 5,000 units of processor chip, A-403, each year for use on its production line. At this level of activity, the cost per unit of processor chip is: Direct materials $ 345 Direct labor 20 Variable manufacturing overhead 8 Fixed manufacturing overhead 80 Total manufacturing cost per unit $ 453 An outside supplier has offered to sell all units of processor chip the company requires. If the company decided to discontinue making processor chip, 80% of the above...
MAKE – OR – BUY (OUTSOURCING) DiGabriele Co. is currently producing 20,000 components at a cost...
MAKE – OR – BUY (OUTSOURCING) DiGabriele Co. is currently producing 20,000 components at a cost of $16 per unit. At this level of production, total fixed overhead costs are $100,000. An outside supplier has offered to sell 20,000 units to DiGabriele for $14 a unit. The normal production per-unit costs are shown below: Per Unit Direct materials $ 2 Direct Labor 4 Variable overhead 5 Fixed overhead 5 $ 16 REQUIRED:...
Harvey Manufacturing incurs the following costs to make 5,000 units of a sub-assembly part included in its finishe...
Harvey Manufacturing incurs the following costs to make 5,000 units of a sub-assembly part included in its finished product. Direct materials $10,000 Direct labor 20,000 Variable overhead 25,000 Fixed overhead 50.000 Included in the $50,000 of fixed overhead is $3,000 spent to rent production equipment that could be avoided if Harvey did not manufacture this part. If Harvey buys the part from an outside supplier, it could use factory resources to make another product which is estimated to have a...
19. Marathon Manufacturing Company can make 10,000 units of a necessary component part with the following...
19. Marathon Manufacturing Company can make 10,000 units of a necessary component part with the following costs per unit: Direct Materials $15 Direct Labor Variable Overhead Fixed Overhead Product cost per unit $55 Marathon Manufacturing Company can purchase the component externally for $38 per unit. Only 25% of the total fixed costs can be avoided. What is the correct make-or-buy decision in order to maximize net income? a. Make and save $12,000 6 Buy and save $12,000 C. Make and...
Teich Inc. is considering whether to continue to make a component or to buy it from...
Teich Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 13,300 of the components each year. The unit product cost of the component according to the company's absorption cost accounting system is given as follows Direct maternals Direct labor Varlable manufacturing overhead FIxed manufacturing overhead Unit product cost $910 6.10 1.90 3.90 $21.00 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead. 30% is...
Sardi Inc. is considering whether to continue to make a component or to buy it from...
Sardi Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 11,700 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 7.50 4.50 0.30 2.30 $14.60 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 30% is...
Iwasaki Inc. is considering whether to continue to make a component or to buy it from...
Iwasaki Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 14,200 of the components each year. The unit product cost of the component according to the company's absorption cost accounting system is given as follows: Direct materials $ 10.00 Direct labor 7.00 Variable manufacturing overhead 2.80 Fixed manufacturing overhead 4.80 Unit product cost $24.60 Assume that direct labor is a variable cost. Of...
Exercise 8-10 Every year Swifty Industries manufactures 8,600 units of part 231 for use in its...
Exercise 8-10 Every year Swifty Industries manufactures 8,600 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: $ 4 10 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total 10 Flintrock, Inc., has offered to sell 8,600 units of part 231 to Swifty for $33 per unit. If Swifty accepts Flintrock's offer, its freed-up facilities could be used to earn $14,400 in contribution margin by manufacturing part...
Sard Inc is considering whether to continue to make a component or to buy it from an outside supper. The company uses 12.600 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows Direct materials Direct labor Variable facturing overhead Fixed facturing overhead Unit product cost Assume that direct laboris a variable cost of the fored manufacturing overhead 15 is dat if the component were bought from...
Harvey Manufacturing incurs the following costs to make 5,000 units of a sub-assembly part included in its finished product. Direct materials $10,000 Direct labor 20,000 Variable overhead 25,000 Fixed overhead 50.000 Included in the $50,000 of fixed overhead is $3,000 spent to rent production equipment that could be avoided if Harvey did not manufacture this part. If Harvey buys the part from an outside supplier, it could use factory resources to make another product which is estimated to have a...
19. Marathon Manufacturing Company can make 10,000 units of a necessary component part with the following costs per unit: Direct Materials $15 Direct Labor Variable Overhead Fixed Overhead Product cost per unit $55 Marathon Manufacturing Company can purchase the component externally for $38 per unit. Only 25% of the total fixed costs can be avoided. What is the correct make-or-buy decision in order to maximize net income? a. Make and save $12,000 6 Buy and save $12,000 C. Make and...
Teich Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 13,300 of the components each year. The unit product cost of the component according to the company's absorption cost accounting system is given as follows Direct maternals Direct labor Varlable manufacturing overhead FIxed manufacturing overhead Unit product cost $910 6.10 1.90 3.90 $21.00 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead. 30% is...
Sardi Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 11,700 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 7.50 4.50 0.30 2.30 $14.60 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 30% is...
Exercise 8-10 Every year Swifty Industries manufactures 8,600 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: $ 4 10 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total 10 Flintrock, Inc., has offered to sell 8,600 units of part 231 to Swifty for $33 per unit. If Swifty accepts Flintrock's offer, its freed-up facilities could be used to earn $14,400 in contribution margin by manufacturing part...
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