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brilliants [131]
3 years ago
5

Wood Chuck Furniture currently manufactures rocking chairs as its main product. Each chair uses one seat cushion and one back cu

shion with the following costs per set of cushions (one seat and one back): Direct materials $ 1 Direct labor 10 Variable overhead 5 Fixed overhead 8 Total $ 24 Shepert Company has contacted Wood Chuck with an offer to sell it 5,000 sets of cushions for $18 each. If Wood Chuck buys the cushions, $2 of the fixed overhead per unit will be allocated to other products. Should Wood Chuck make or buy the cushions
Business
1 answer:
andre [41]3 years ago
8 0

Answer:

Yes buy the cushions

Explanation:

The computation is shown below:

= Manufacturing cost - purchase cost

where,

Manufacturing cost is

= Direct materials + direct labor + variable overhead cost + fixed overhead cost

= $1 + $10 + $5 + $6

= $22

The fixed overhead cost is

= $8 - $2

= $6

And, Purchase cost is  $18

Savings cost is

= $22 - $18

= $4 per set

And, the number of sets is 4,000 cushion sets

So, total amount saved is

= 5,000 cushion sets ×$4 per set

= $20,000

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What do you understand from the term, ‘monopoly’. Give an example of a government-created monopoly. Is creating this monopoly ne
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<h3>What Is the Security Market Line?</h3>

The security market line (SML) is a line drawn on a chart that serves as a graphical representation of the capital asset pricing model (CAPM)—which shows different levels of systematic, or market risk, of various marketable securities, plotted against the expected return of the entire market at any given time.

Its Also known as the "characteristic line," the SML is a visualization of the CAPM, where the x-axis of the chart represents risk (in terms of beta), and the y-axis of the chart represents expected return. The market risk premium of a given security is determined by where it is plotted on the chart relative to the SML

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Check the P/E ratio and earnings per share in the company's annual report for the accounting period to get an idea of the market price for that particular date. For instance, if the P/E ratio is 20 and the company reported EPS of 7.50, the expected market price comes out to 150 per share.

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