Answer and Explanation:
The computation is shown below;
a) The In-house purchasing cost last year is
= Fixed costs + Variable costs
=$85,000 + Total number of purchase orders × cost per order
= $85,000 + 1400 × 15
= $106,000
b)
The outsourcing cost is
Outsourcing cost = Fixed costs +Variable costs
= $100,000 + Total number of purchase orders × cost per order
= $100,000 + 1400 × 5
= $107,000
c) Total number of purchase orders = 1600
In-house purchasing cost = 85,000 + 1600 × $15 = $109000
Outsourcing cost = $100,000 + 1600 × $5 = $108000
Yes, David should outsource as the outsourcing cost is less than the in-house purchasing cost.
Answer:
Break even units = 858 adapters.
Explanation:
Revised selling price = $24 per adapter
Variable cost = $17 per adapter
Contribution per adapter = $24 - $17 = $7
Provided fixed cost = $6,000
Break even point in units =
= $6,000/$7 = 857.14
Since the unit cannot be rounded off downwards, we have
Final Answer
Break even units = 858 adapters.
Answer:
Both direct costs and activity costs.
Explanation:
Activity-based costing model takes into consideration both the direct and activity costs, as it does not omit the overhead or indirect costs, unlike some other costing methods. This costing model, is mostly used in the manufacturing. This method identifies activities and assigns them to each product or service accordingly.
Answer:
$10,944
Explanation:
Preparation of a pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant
PROFORMA INCOME STATEMENT.
Sales $57,120
(1.20* $ 47,600)
Less Costs $42,720
($35,600/$47,600)*$57,120
Taxable Income $14,400
($57,120-$42,720)
Taxes $3,456
(24%*$14,400)
Net Income $10,944
($14,400-$3,456)
Therefore pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant will be $10,944.