Stephans Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materi
1 answer:
Answer:
Stephans shall make the product.
The difference is of $5,000 to be saved in case of making the product.
Explanation:
Provided details,
Cost per unit
Variable = Direct material $1 + Direct Labor $10 + Variable Overhead $5.00
= $16
Fixed overhead = $8
Including fixed cost the cost per unit of manufacturing = $16 + $8 = $24
In case of buying cost = $22 per unit.
Cost for 5,000 units in case of buying = $22 5,000 = $110,000
Cost of making 5,000 units = $24 5,000 = $120,000
Fixed cost for 5,000 units = $8 5,000 = $40,000
$25,000 cost is avoidable.
Therefore non avoidable cost = $40,000 - $25,000 = $15,000
Therefore total cost of purchasing = $110,000 + $15,000 = $125,000
Since total cost of purchasing is more than cost of making, goods shall be manufactured and not produced.
Difference = $125,000 - $120,000 = $5,000 additional in case of purchasing.
You might be interested in
Answer:
purchases = 160000
Explanation:
given data
beginning inventory = $140,000
amount of inventory on hand = $80,000
net sales = $400,000
gross profit rate = 40%
solution
we first Computation of cost of goods sold hat is
Gross profit rate = × 100
= = =
= 100 Gross profit = 16000000
so
Gross profit = 160000
and
Cost of goods sold is = sales - gross profit
so
Cost of goods sold = 400000 - 160000
Cost of goods sold = 240000
and
Cost of goods sold = opening inventory + purchases - closing inventory
so put here value
240000 = 140000 + purchases - 60000
so purchases = 160000