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kumpel [21]
3 years ago
9

Scott Corporation produces a part for use in the production of one of its products. The per-unit costs associated with the annua

l production of 1,000 units of this part are as follows: Direct Materials $10.50 Direct labor $24.00 Variable factory overhead $ 5.50 Fixed factory overhead $12.00 Total Costs $52.00 $5,000 of the fixed factory overhead costs associated with the production of this product are common fixed costs. Larson Company has offered to sell 1,000 units of the same part to Scott Corporation for $42 per unit. Scott should:
Business
1 answer:
denpristay [2]3 years ago
3 0

Answer:

It is cheaper to buy the part. The company will save $5,000.

Explanation:

Giving the following information:

UNitary production cost:

Direct Materials $10.50

Direct labor $24.00

Variable factory overhead $ 5.50

Total avoidable Fixed factory overhead= (12*1,000) - 5,000= 7,000

Larson Company has offered to sell 1,000 units of the same part to Scott Corporation for $42 per unit.

First, we need to calculate the total cost of making the units:

Total cost= (10.5 + 24 + 5.5)*1,000 + 7,000= $47,000

Now, the total cost of buying them:

Buy= 1,000*42= $42,000

It is cheaper to buy the part. The company will save $5,000.

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4 years ago
Read 2 more answers
Wayman Corporation reports the following amounts in its December 31, 2018, income statement.
Viktor [21]

Answer:

Wayman Corporation's Net Income for the year ended December 31, 2018 is $64,000.

Solution in excel file is also attached for your reference.

Explanation:

                                                 Wayman Corporation  

                        Income Statement for the year ended Dec 31, 2018  

 

Sales Revenue                                                      $348,000  

Less: Cost of Goods Sold                                      $124,000  

Gross Profit                                                               $224,000    

Less Expenses:    

Operating Expenses  

 Selling Expenses  

   Salaries Expense                      $34,000  

   Advertising Expense                      $24,000  

  Total Selling Expenses              $58,000    

 General & Admin Expenses  

   Utilities Expense                      $44,000  

  Total General & Admin Expenses   $44,000    

 Total Operating Expenses                                     $102,000    

Income from Operations                                     $122,000    

Other Expenses  

Interest Expense                                                     $14,000    

Income before income taxes                              $108,000    

Less: Income Tax Expense                                     $44,000    

Net Income                                                              $64,000  

Download xlsx
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