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Sav [38]
3 years ago
5

Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of prod

ucing the 14,900 units of the part that are needed every year.Per Unit Direct materials $ 1.80Direct labor $ 2.80Variable overhead $ 5.60Supervisor's salary $ 6.10Depreciation of special equipment $ 7.20Allocated general overhead $ 4.30An outside supplier has offered to make the part and sell it to the company for $22.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $20,900 of these allocated general overhead costs would be avoided.Required:a. Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the company.b. Which alternative should the company choose?Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the company.
Business
1 answer:
Alex787 [66]3 years ago
5 0

Answer:

a)

Production costs for part U67:

Direct materials $1.80 x 14,900 units = $26,820

Direct labor $2.80 x 14,900 units = $41,720

Variable overhead $5.60 x 14,900 units = $83,440

Supervisor's salary $6.10 x 14,900 units = $90,890

Depreciation of special equipment $7.20 x 14,900 units = $107,280

Allocated general overhead $4.30 x 14,900 units = $64,070

total production costs = $414,220

cost of purchasing the units from outside supplier:

14,900 units x $22 purchase price = $327,800

unavoidable fixed costs = $107,280 + ($64,070 - $20,900) = $150,450

total costs associated to purchasing units = $478,250

Financial disadvantage of purchasing the part from outside supplier instead of producing it = $414,220 - $478,250 = ($64,030)

b)

the company should continue to produce part U67 since the relevant costs associated to purchasing it from an outside vendor would result in a financial disadvantage for the company.

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nika2105 [10]

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Based on the information given in the question, the amount of the estimated average income for a proposed investment will be calculated as:

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8 0
2 years ago
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kolezko [41]

Answer:

Interest Expense 696 Interest Payable 696

Explanation:

Based on the information given the appropiate adjusting journal entry to be made on December 31, 2022 for the interest expense accrued to that date, If we assumed that no journal entries have been made previously to accrue interest is:

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3 0
3 years ago
Suppose your firm receives a $ 3.2 million order on the last day of the year. You fill the order with $ 1.7 million worth of inv
klio [65]

Answer and Explanation:

The consequences of given transactions are as follows

a. Revenues rise by $3.2 million  as the firm received an order

b. Earnings rise by $1.5 million  as the firm received an order and it filled by an orders i,e ($3.2 - $1.7)

c. Receivables rise by $1.80 million  as it determines the remaining balance which ultimately increased the receivable balance

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= Earnings - receivable + inventory

= $1.5 million - $1.80 million + $1.7 million

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4 0
3 years ago
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