Answer:
The financial advantage of buying 72,000 units from the supplier instead of making those units is that Cane would not its traceable fixed manufacturing overhead.
If we assume that Cane's fixed costs are made up of traceable fixed manufacturing overhead of 60% or $60,000 and 40% of common fixed expenses or $40,000, then $60,000 would not be incurred by Cane in the period it decides to buy from the supplier.
Explanation:
Traceable fixed manufacturing overheads are the expenses that can be traced to production units. We can say that they are variable with production units or that production gives rise to them. This implies that when there is production, such costs are incurred, whereas, they are not when there is no production. They arise due to usage. For example, more utility energy is consumed based on production.
The common fixed expenses are allocated costs, including administrative expenses, for example. By their nature, they are generally unavoidable whether Cane decides to produce or buy from the supplier. And since they must be incurred and allocated, they are not relevant in making a buy or make decision.
Based on the selling price of the picture frames and the unit variable costs, the break-even point is 400 picture frames.
<h3>What is the breakeven point?</h3>
This can be found by the formula:
= Fixed costs / (Selling price - Variable costs)
Solving gives:
= 32,000 / (120 - 40)
= 32,000 / 80
= 400 picture frames
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Answer:
Cost of goods sold= $816
Explanation:
Giving the following information:
Acme-Jones Corporation uses a weighted-average perpetual inventory system.
August 2: 24 units were purchased at $23 per unit.
August 18: 40 units were purchased at $25 per unit.
On August 29: 34 units were sold.
Weighted-average= (23 + 25)/2= $24
Cost of goods sold= 34*24= $816