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babymother [125]
3 years ago
8

Innova uses 1,100 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to manufac

ture the component are as follows. Direct materials $63.96 Direct labor 41.72 Overhead 126.50 Total $232.18 Overhead costs include variable material handling costs of $7.50, which are applied to products on the basis of direct material costs. The remainder of the overhead costs are applied on the basis of direct labor dollars and consist of 60% variable costs and 40% fixed costs. A vendor has offered to supply the IMC2 component at a price of $250 per unit.
Prepare the incremental analysis for the decision to make or buy IMC2. Should Innova purchase the component from the outside vendor if Innova's capacity remains idle?
Business
1 answer:
notka56 [123]3 years ago
4 0

Answer:

a.                       Make IMC2       Buy IMC2           N.I. Increase/(Decrease)

Direct Materials        $63.96                                                   $63.96

Direct Labor              $41.72                                                    $41.72

Material handling    $7.50                                                     $7.50

Variable Overhead   $71.40                                                    $71.40

Purchase Price                                $250.00                         <u>-$250.00</u>

Total Unit Cost          $184.58       $250.00                         <u>-$65.42  </u>

<u>Workings</u>: Variable Overhead  = ($126.5 - $7.5) x 60% = $71.40

b. No, Innova should not purchase the component from the outside vendor if Innova's capacity remains idle.

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3 years ago
1. Over the past year, a customer has surrendered, in whole or in part, three life insurance policies. If part of a money launde
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Answer:

It represents the Integration stage

Explanation:

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2 years ago
In 2019, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. T
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Answer:

Break-even point in units= 1,500

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Giving the following information:

Selling price= $600

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8 0
2 years ago
The primary difference between variable costing and absorption costing is
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Answer:

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George, an unmarried cash basis taxpayer, received the following amounts during 2016:Interest on savings accounts$2,000Interest
madreJ [45]

Answer:

c. $3,150

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The computation of the gross income is shown below:

= Interest on savings accounts + Interest on a State bond + Interest portion of proceeds of a 5% bank certificate of deposit + Dividends on USG common stock

= $2,000 + $600 + $250 + $300

= $3,150

We do not consider the school bonds as it would not be included in the gross income. So, we ignored it

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3 years ago
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