Answer:
cost of goods manufactured= $336,980
Explanation:
First, we need to calculate the direct material used:
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 10,500 + 98,100 - 13,500
Direct material used= $95,100
Now, the cost of goods manufactured:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 5,350 + 95,100 + 80,300 + 160,000 - 3,770
cost of goods manufactured= $336,980
Northberg Company is preparing a cash budget for August. The company has $16,000 cash at the beginning of August and anticipates $126,000 in cash receipts and $134,500 in cash payments during August. Northberg Company wants to maintain a minimum cash balance of $15,000. To maintain the $15,000 required balance, during August the company must: Group of answer choices Borrow $15,000. Repay $7,500. Repay $8,500. Borrow $7,500. Borrow $8,500.
Answer:
Borrow $7,500
Explanation:
The calculation of the amount that should be required to maintain the required balance is given below:
Preliminary cash balance
= Opening balance + Cash receipts - Cash disbursements
= $16,000 + $126,000 - $134,500
= $7,500
Since we have to maintain $15,000 so we have to borrow the following amount
= $15,000 - $7,500
= $7,500
Well Water Inc. wants to produce and sell a new flavored water. In order to penetrate the market, the product will have to sell at $2.00 per 12 oz. bottle. The following data has been collected:
Annual sales......................................................50,000 bottles
Projected selling and administrative costs.....$8,000
Desired profit.....................................................$80,000
The target cost per bottle is:__________
Answer:
The answer is "0.4".
Explanation:
[tex]\\\to \text{Total Cost of Goods Sold = Sales revenue - Desired profit}[/tex]
[tex]= (2\times 50,000) - 80,000\\\\= 1,00,000 - 80,000\\\\= 20,000[/tex]
Calculating the target cost per bottle:
[tex]= \frac{\text{Total cost of goods sold}}{ \text{units sold}}\\\\= \frac{20,000}{50,000}\\\\= \frac{2}{5}\\\\= 0.4[/tex]
bRamapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. Product Number of Units Direct Labor Hours Per Unit Machine Hours Per Unit Blinks 1,048 4 7 Dinks 2,236 5 6 All of the machine hours take place in the Fabrication department, which has an estimated overhead of $82,200. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $102,000. Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs based on direct labor hours. The factory overhead allocated per unit of Dinks is
Answer:
Ramapo Company
The factory overhead allocated per unit of Dinks is:
= $56.94.
Explanation:
a) Data and Calculations:
Product Number of Units Direct Labor Machine
Hours Per Unit Hours Per Unit
Blinks 1,048 4 7
Dinks 2,236 5 6
Fabrication Assembly
Estimated overhead $82,200 $102,000
Machine hours:
Blinks 7,336
Dinks 13,416
Total machines hours 20,752
Direct Labor hours:
Blinks 4,192
Dinks 11,180
Total machines hours 15,372
Total factory overhead Blinks Dinks
Fabrication department $29,058 $53,142
Assembly department 27,816 74,184
Total allocated overhead $56,874 $127,326
Units produced 1,048 2,236
Factory overhead per unit $54.27 $56.94 ($127,326/2,236)
8794979666++++45626563.
A sporting equipment store expects to purchase $8,200 of ski boots in October. The store had $2,800 of ski boots in merchandise inventory at the beginning of October, and expects to have $1,800 of ski boots in merchandise inventory at the end of October to cover part of anticipated November sales. What is the budgeted cost of goods sold for October?
a) $7,000.
b) $9,000.
c) $8,000.
d) $12,000.
e) $11,000.
Answer:
$9,200
Explanation:
Calculation to determine the budgeted cost of goods sold for October
Using this formula
Budgeted cost of goods sold for October =Cost of ski boots + Inventory at the beginning - Inventory at the end
Let plug in the formula
Budgeted cost of goods sold for October = $2800 + $8200 - $1800
Budgeted cost of goods sold for October= $9200
Therefore the budgeted cost of goods sold for October is $9,200
When you retire, you wish to have $3 million in your retirement account. You decided to add $2,000 every quarter to your retirement account and invest to generate annualized return of 8% from your investment, how many years do you think it will take to have $3 million in the account
Answer:
43.35 years
Explanation:
Use the following formula to determine the number of years
Future Value of Annuity = Periodic Annuity x ( 1 + Periodic Interest rate )^numbers of periods ) - 1 / Periodic Interest rate
Where
Future Value of Annuity = $3 million = $3,000,000
Periodic Annuity = $2,000 per quarter
Periodic Interest rate = Interest rate x Quarterly fraction = 8% x 3/12 = 2%
Numbers of periods = n = ?
Placing values in the formula
$3,000,000 = $2,000 x ( 1 + 2% )^n ) - 1 / 2%
$3,000,000 / $2,000 = ( 1 + 2% )^n ) - 1 / 2%
1,500 = ( 1.02 )^n ) - 1 / 2%
1,500 x 2% = ( 1.02 )^n ) - 1
30 = ( 1.02 )^n ) - 1
30 + 1 = 1.02^n
31 = 1.02^n
Log 31 = n log 1.02
n = Log 31 / Log1.02
n = 173.41
Now calculat ethe nUmbers of years as follow
Numbers of years = n x 3/12
Numbers of years = 173.41 x 3/12
Numbers of years = 43.35 years
der owns a hamburger restaurant. Slider's minimum average variable cost is $10$ 10 at a quantity of 100 hamburgers, and his minimum average total cost is $15$ 15 at a quantity of 200 hamburgers. His total fixed cost is $300$ 300 . Use this information to answer the questions. What is Slider's AVC when he sells 200 hamburgers?
Answer:
$13.50
Explanation:
Average Total Cost = Average Variable Cost + Average Fixed Cost
Average Fixed Cost = total fixed cost / quantity
300 / 200 = 1.5
15 = 1.5 + Average Variable Cost
Average Variable Cost =15 - 1.5 = 13.50
Question 4 James Bennett also allocates wealth between youth and old age. He has no cash currently (in his youth), but will inherit $3000 in his old age. He can lend and borrow at the bank at 18% (that is, lending $1 in youth will give him $1.18 in old age). He has an investment opportunity that costs $12,000 now in his youth and has a payoff of $15,000 in his old age. This is the only investment opportunity available to him. What is the most he can consume in his youth
James Bennet needs us to locate investment opportunities for him.
James divides his fortune between youth and old age, as is shown to us. He is currently cashless.
He has access to bank borrowing and lending at 18%.
Some investment opportunities are presented to him.
Investing is the act of placing money into a bank, a piece of property, or a company.
Savings can also take the form of investments.
The most he should spend while still young is $15,254.23.
This calculation is displayed.
The future value is the present value times 1.18.
Future worth = $15,000 + $3,000
= $ 18,000
Therefore, the present value is equal to $18,000 divided by 1.18.
= $ 15, 254.23.
The value that represents today's value is referred to as present value.
Consequently, we might infer that the greatest amount is $15,254.23 that he can spend during his childhood.
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Tri-County G&T sells 145,000 MWh per year of electrical power to Boulder at $ per MWh, has fixed costs of $ million per year, and has variable costs of $ per MWh. If Tri-County has MWh of demand from its customers (other than Boulder), what will Tri-County have to charge to break even?
Answer:
$105.85
Explanation:
Given that :
Fixed cost = $83.1 million
Variable cost = $30 / MWh
Number of demand, $1,000,000 MWh
Variable cost to other customers =[(1,000,000 + 145000) * $30) = $34350000
To break even :
Total Cost = Total revenue
(fixed Cost + variable cost) = total revenue
Let amount per MWh required to break even = x (amount sold to other customers)
(83100000 + 34350000) = (145000*80 + 1000000x)
117450000 = 11600000 + 1000000x
117450000 - 11600000 = 1000000x
105850000 = 1000000x
x = 105850000 / 1000000
x = $105.85
Soft Lumber has bonds, preferred stock and common stock as its capital components. _____________ is the right most apt to be granted to its preferred shareholders.
Answer: right to share in company profits prior to other shareholders
Explanation:
The preferred shareholders are paid their dividends before dividends are paid to other common shareholders. The preferred stock also gives no voting rights to the shareholders.
Preferred shareholders are known to have priority over the income of a company right to share in company profits prior to other shareholders.
Money markets trade securities that: _______________
I. mature in one year or less.
II. have little chance of loss of principal.
III. must be guaranteed by the federal government.
a. I and III only
b. I only
c. I and II only
d. I, II, and III
Meyer Company reported the following for its recent year of operation:
From Income Statement:
Depreciation Expense $1,000
Loss on the Sale of Equipment (3,000)
From the comparative balance sheet:
Beginning balance, equipment $12,500
Ending balance, equipment 8,000
Beginning balance, accumulated depreciation 2,000
Ending balance, accumulated depreciation 2,600
No new equipment was purchased during the year. What was the selling price of the equipment?
Answer:
$900
Explanation:
Calculation to determine the selling price of the equipment
First step
Cost of equipment sold = Beginning balance - Ending balance
Cost of equipment sold=$12,500-$8,000
Cost of equipment sold=$4,500
Second step
Ending balance= Beginning balance + Depreciation expense - Accumulated depreciation on equipment sold
Ending balance=$2,000+$1,000-$600
Ending balance=$2,400
Third step
Book value = Cost of equipment sold - Accumulated depreciation on equipment sold
Book value=$4,500-$600
Book value=$3,900
Now let determine the selling price of the equipment
Selling price=$3,000-$3,900
Selling price=$900
Therefore the selling price of the equipment.is $900
Fruit Computer Company makes a fruit themed computer. Variable costs are $220 per unit, and fixed costs are $32,000 per month. Fruit Computer Company sells 500 units per month at a sales price of $300. The company believes that it can increase the price if the computer quality is upgraded. If so, the variable cost will increase to $240 per unit, and the fixed costs will rise by 50%. The CEO wishes to increase the company's operating income by 25%. Which sales price level would give the desired results
Answer:
Fruit Computer Company
The sales price level that would give the desired results is:
= $356 per unit
Explanation:
a) Data and Calculations:
Variable costs per unit = $220
Fixed costs per month = $32,000
Monthly sales units = 500 units
Selling price per unit = $300
Before Change After Change
Sales revenue $150,000 $178,000 ($168,000 + $10,000)
Variable costs 110,000 120,000
Fixed costs 32,000 48,000
Total costs $142,000 $168,000
Operating income $8,000 $10,000 ($8,000 * 1.25)
The sales price level that would give the desired results is $356 ($178,000/500). This represents an increase of 18.7% ($56/$300 * 100).
Which of the following food borne illness has a preventative vaccine
A. E.coli
B.norovirus
C. Hep. A
D. Shigella
Answer:
C. Hep. A
Explanation:
From the available options, Hep. A is preventable with a vaccine. The vaccine was created in 1995. It is administered to individuals in two seperate doses and usually done with a time span of 6 months between dose. Having both doses administered helps prevent the individuals from the Hep. A virus long term. Like most vaccines, this one has a 95% effectiveness for preventing the virus from affecting the individual's body.
Andrews Corporation has income from operations of $240,000. In addition, it received interest income of $24,000 and received dividend income of $29,500 from another corporation. Finally, it paid $11,800 of interest income to its bondholders and paid $45,000 of dividends to its common stockholders. The firm's federal tax rate is 21%. What is the firm's federal income tax
Answer: $54,820.50
Explanation:
Federal income tax = Taxable income * tax rate
Taxable income = Income from operations + Interest income received + Dividend income received - Interest income paid
= 240,000 + 24,000 + (30% * 29,500) - 11,800
= $261,050
Federal income tax = 261,050 * 21%
= $54,820.50
Note: Only 30% of Dividends received are taxable
Kiwi Plc sold an antique painting which had been purchased inJanuary 1996 for £21,000. It was sold for £4,200 in January 2021. The proceeds were received net of auction fees of £650. What is Kiwi Plc's allowable loss?
Answer:
$17,450
Explanation:
The antique painting that was bought in January 1996 was sold for $21,000
It was sold for 4,200 in January 2021
It received a net auction fee of 650
Therefore the allowable loss can be calculated as follows
= 21,000-4200+650
= 17,450
Hence the allowable loss is $17,450
a)What are the expected returns and standard deviations of a portfolio consisting of:1.100 percent in stock A
Answer:
12%
1.00
Explanation:
Note that the expected return on stock A which is 12% is missing from the question as well as the standard deviation of A which is 1.00
The expected return from stock A with 100% of funds(total amount of investment) invested in stock A is the percentage invested in A multiplied by the expected return of stock A shown thus:
expected return=100%*12%
portfolio expected return=12%
portfolio standard deviation(if 100% invested in A)=1.00*100%
Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are: M N OUnit sales price$12 $10 $11Unit variable costs 9 8 9Total fixed costs are $585,000. The selling price per composite unit for the current sales mix (rounded to the nearest cent) is:
Answer:
Selling price per composite unit= $11.3
Explanation:
Giving the following information:
Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2.
Unit price and cost data are: M N OUnit sales price$12 $10 $11
First, we need to calculate the sales proportion for each product:
M= 3/6= 0.5
N= 1/6= 0.17
O= 2/6= 0.33
Now, the selling price per composite unit:
Selling price per composite unit= (0.5*12) + (0.17*10) + (0.33*11)
Selling price per composite unit= $11.3
Suppose that a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel; $40,000 on seed, fertilizer, and pesticides; and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations. What is the family's accounting cost? What is the family's economic cost? Could the family's economic cost ever exceed its accounting cost? Why or why not?
Answer:
Accounting Cost
Accounting costs refers to the explicit costs which ar the actual costs related to the business venture. In this case that would be:
= Fuel costs + Seed costs + Equipment
= 25,000 + 40,000 + 25,000
= $90,000
Economic cost
This includes the accounting costs and then adds the implicit costs which are the opportunity costs of choosing the current business venture. In this case it is the $20,000 they could have been making working at other occupations.
= Accounting cost + Salary foregone
= 90,000 + 20,000
= $110,000
Economic costs will always be higher than Accounting costs because they include both the accounting costs and opportunity costs.
A horizontal merger between two firms occurs when: __________
a. the products of the merging firms were not related in any manner before the merger.
b. one firm is a producer of products, and the other firm is a producer of services.
c. one firm is a domestic firm, and the other is a foreign company
d. the firms stood in a buyer-seller relationship before the merger.
e. the merger partners were competitors.
Answer:
e
Explanation:
A merger can be described as the absorption of one firm by another firm.
When a merger occurs, one of the firms would not exist as a separate entity while the other firm would continue to exist.
Types of merger
1. Horizontal merger : this is a type of merger that occurs between firms in the same industry. The firms are usually competitors.
Reasons for an horizontal merger
It is done to increase the market power of a firmThis type of merger is done to achieve economies of scale.An example of an horizontal merger is the merger between Mobil and Exxon in 1999.
2. Vertical merger : this is when a firm purchases another firm in the same production line. e.g. a baker purchases a pastry distributing company
Reasons for a vertical merger
Cost savingsIt provides the firm acquiring a greater control of the production process.Types of vertical merger
a. Backward integration : it is when the acquiring firm purchases a firm ahead of it in the production process. e.g. a baker purchases a pastry distributing company
b. Forward integration : it is when the acquiring firm purchases a firm that is behind it in the production process. e.g. a baker purchases a firm that supplies grains
3. Conglomerate merger : This occurs when the products of the merging firms were not related in any manner before the merger.
A lender uses these tools to help prequalify you for a mortgage
Answer:
Following are the summary of tools/documents that are used by lenders to pre-qualify their customers for a mortgage :
1. Tax returns, W-2s, and 1099s are examples of income as well as employment records.
2. Bank, pension, and brokerage accounts property declarations
3. Settlements on your obligations on a regular basis as well as any real estate debt statements.
4. Rent deposits, divorce, insolvency, and repossession records are all kept on file.
Suppose you entered a contract to buy your friend's iPad. Without your knowledge, it was malfunctioning at the time you bought it, and it died soon after you started using it. Your friend had recently removed a large number of applications from the iPad that were not working. Although he honestly thought the problem was with the applications and not the iPad itself, he failed to tell you about the problem. You reasonably concluded, based on your inspection of all of the current applications on the iPad, that it was functioning properly. Can you rescind the contract to buy the iPad?
a. Yes, due to fraud.
b. Yes, due to innocent misrepresentation.
c. Yes, due to mutual mistake.
d. Yes, due to undue influence.
e. No, the latent malfunction was not material, because the iPad was functioning when you bought it.
Answer:
Can you rescind the contract to buy the iPad?
b. Yes, due to innocent misrepresentation.
Explanation:
You can rescind the contract without damages or you claim damages based on the loss that you have already incurred for the contract. An innocent misrepresentation occurs when the misrepresentation is not fraudulent nor negligent. Therefore, you can rescind the contract or affirm it. But if the misrepresentation is fraudulent or negligent, you can rescind the contract as well as claim damages.
A select list of transactions for Goals follows:
For each transaction, identify what type of adjusting entry would be needed. Select from the following four types of adjusting entries: deferred expense, deferred revenue, accrued expense, and accrued revenue.
Apr. 1 Paid six months of rent, $4,800.
10 Received $1,200 from customer for six month service contract that began April 1.
Apr. 15 Purchased a computer for $1,000.
Apr. 18 Purchased $300 of office supplies on account.
Apr. 30 Work performed but not yet billed to customer, $500
Apr. 30 Employees earned $600 in salaries that will be paid May 2.
Answer:
Goals
Identification of Needed Adjusting Entry:
Transaction Adjusting Entry Type
Apr. 1 Paid six months of rent, $4,800. Deferred expense
Apr. 10 Received $1,200 from customer for Deferred revenue
six month service contract that began April 1.
Apr. 15 Purchased a computer for $1,000. Deferred expense
Apr. 18 Purchased $300 of office
supplies on account. Accrued expense
Apr. 30 Work performed but not yet
billed to customer, $500 Accrued revenue
Apr. 30 Employees earned $600 in Accrued expense
salaries that will be paid May 2.
Explanation:
Four types of adjusting entries:
Goal's deferred expense refers to an expense that Goal will incur in future periods but already paid for.
Goal's deferred revenue includes its revenue received in advance of service.
Goal's accrued expense refers to an expense that has been incurred but not yet paid for.
Goal's accrued revenue includes revenue that has been earned but not yet received.
Question 4
Which of the following is an example of an asset?
A. Repairs and Maintenance
B. Accounts Receivable
C. Accounts Payable
D. GST Collected
Answer:
Accounts Receivable
Explanation:
A is an expense, C and D are liabilities
How much does international trade affect you personally?
Answer:
maybe a lot for me ok
maybe you
AJ Manufacturing Company incurred $54,500 of fixed product cost and $43,600 of variable product cost during its first year of operation. Also during its first year, AJ incurred $17,350 of fixed and $13,900 of variable selling and administrative costs. The company sold all of the units it produced for $178,000. Required Prepare an income statement using the format required by generally accepted accounting Principles (GAAP). Prepare an income statement using the contribution margin approach.
Answer and Explanation:
The preparation of the income statement under following approaches are
Under generally accepted accounting Principles (GAAP)
Sales $178,000
Less: cost of goods sold ($54,500 + $43,600) -$98,100
Gross margin $79,900
Less: selling & general admin ($17,350 + $13,900) -$31,250
Net income $48,650
Under contribution margin approach
Sales $178,000
Less: variable cost ($43,600 + $13,900) -$57.5
Contribution margin $120,500
Less: fixed cost ($54,500 + $17,350) -$71,850
Net income $48,650
Consider the following information for Maynor Company, which uses a periodic inventory system: Transaction Units Unit Cost Total Cost January 1 Beginning Inventory 21 $ 71 $ 1,491 March 28 Purchase 31 77 2,387 August 22 Purchase 42 81 3,402 October 14 Purchase 47 87 4,089 Goods Available for Sale 141 $ 11,369 The company sold 47 units on May 1 and 42 units on October 28. Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods. FIFO LIFO Weighted Average
Answer:
FIFO LIFO WEIGHTED AVERAGE
Ending inventory 4494 3878 4193
Cost of Goods Sold 6875 7491 7176
Explanation:
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO
RECIEPTS COST OF GOODS SOLD BALANCE
DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $
balance 21 71 1491 21 71 1491
Purchasse
28-Mar 31 77 2387 31 77 2387
22-Aug 42 81 3402 37 81 2997 5 81 405
14-Oct 47 87 4089 47 87 4089
TOTAL 141 11369 89 6875 52 4494
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO
RECIEPTS COST OF GOODS SOLD BALANCE
DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $
balance 21 71 1491 21 71 1491
Purchasse
28-Mar 31 77 2387 31 77 2387
22-Aug 42 81 3402 42 81 3402
14-Oct 47 87 4089 47 87 4089
TOTAL 141 11369 89 7491 52 3878
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE
RECIEPTS COST OF GOODS SOLD BALANCE
DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $
balance 21 71 1491
Purchasse
28-Mar 31 77 2387
22-Aug 42 81 3402
14-Oct 47 87 4089
TOTAL 141 80.63 11369 89 80.63 7176 52 80.63 4193
Dunbar sold 640 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimal places and final answer to the nearest dollar amount.)
Answer:
$428.13
Explanation:
Note The missing word have been attached as picture below
Weighted average cost per unit = [(450*$2.18) + (370*$2.62)] / (450 + 370)
Weighted average cost per unit = ($981 + $969.4) / 820
Weighted average cost per unit = $1950.4 / 820
Weighted average cost per unit = 2.378536585365854
Weighted average cost per unit = $2.3785
Ending inventory unit = 450 + 370 - 640
Ending inventory unit = 180
Value of ending inventory = $2.3785 * 180 units
Value of ending inventory = $428.13
Han Products manufactures 29,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is:
Direct materials $3.70
Direct labor 12.00
Variable manufacturing overhead 2.30
Fixed manufacturing overhead 9.00
Total cost per part $27.00
An outside supplier has offered to sell 29,000 units of part S-6 each year to Han Products for $23 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $79,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier.
Required:
What is the financial advantage (disadvantage) of accepting the outside supplier’s offer?
Answer:
Financial advantage of accepting supplier's offer = $21,000
Explanation:
Relevant costs saved by outsourcing production:
Direct materials $3.70
Direct labor $12.00
Variable manufacturing overhead $2.30
Fixed manufacturing overhead $9.00 * 1/3 = $3
Total cost per part $21.00
Total savings per year = $21 * 29,000 = $609,000
Additional rental income = $79,000
Total = $688,000
Cost of purchasing 29,000 parts = $23 * 29,000 = $667,000
Financial advantage of accepting supplier's offer = $21,000
Somerset Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $62 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 45% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows:
Direct materials $8.00
Direct labor 12.00
Factory overhead (40% of direct labor) 4.80
Total cost per unit $24.80
If Somerset Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 25% of the direct labor costs.
Required:
Prepare a differential analysis dated April 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case.
Answer:
Somerset Computer Company
Differential Analysis dated April 30:
Make Buy
Alternative 1 Alternative 2 Difference
Variable cost per unit $23.00 $62.00 $39.00
Explanation:
a) Data and Calculations:
Purchase price per portable computer carrying case = $62
Unit cost of production:
Direct materials $8.00
Direct labor 12.00
Factory overhead (40% of direct labor) 4.80
Total cost per unit $24.80
Unit cost of production, with overhead broken into fixed and variable:
Direct materials $8.00
Direct labor 12.00
Factory overhead
Fixed overhead 1.80
Variable overhead 3.00
Total cost per unit $24.80
b) With a net gain of $39 per unit, the company should make the unit (Alternative 1) instead of buying it (Alternative 2).
