The answer to the question is (B) on the rise.
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Answer:
The company should make the components because incremental costs are $2 less than the purchase price
Explanation:
The cost of making each unit of component = Direct Labour + Direct Material + Variable Overhead*
*The overhead cost of $4 contains both a fixed and variable element. It has been mentioned that 25% of overhead cost is incremental i.e. it increases with each additional unit produced (marginal cost). The incremental cost is the variable element.
Variable element = $4 x 25% = $1
Fixed element = $4 x 75% = $3
Thus, the cost of making each unit of component = $5 + $2 + $1 = $8,
whereas the cost of purchasing each unit of complement is $10. Hence, the company should produce the component as it is less by $2 ($10 - $8) to produce than it is to purchase.
Answer:
Net income= $98,200
Explanation:
Giving the following information:
Division A:
The contribution margin of $79,300
Division B:
Contribution margin of $126,200.
The total traceable fixed costs are $72,400 and total common fixed costs are $34,900.
<u>To calculate the net operating income, we need to deduct from the combined contribution margin the fixed costs.</u>
<u></u>
Net income= (79,300 + 126,200) - 72,400 - 34,900
Net income= $98,200
Answer:
The correct answer is 40.6 days. None of the options is correct.
Explanation:
The average collection period of the accounts receivable is how long it takes the company to collect its accounts receivable. It is expressed as: (Average accounts receivable / Net credit sales) x 365 days.
Average collection period = [($760,000 + $840,000)/2 / $7,200,000] x 365 days = 40.6 days
This means it takes the company 40.6 days to collect its accounts receivable.
Answer:
The total cost of the units completed and transferred out of the department was: $342,200.
Explanation:
First calculate the Total Cost per Equivalent unit.
Total Cost per Equivalent unit :
Materials $2.10
Conversion $3.80
Total $5.90
Total cost of the units completed and transferred out = Units completed and transferred out × Total Cost per Equivalent unit
= 58,000 units × $5.90
= $342,200
