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DENIUS [597]
3 years ago
11

Somerset Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $62 per unit. The

company, which is currently operating below full capacity, charges factory overhead to production at the rate of 45% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows:
Direct materials $8.00
Direct labor 12.00
Factory overhead (40% of direct labor) 4.80
Total cost per unit $24.80

If Somerset Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 25% of the direct labor costs.

Required:
Prepare a differential analysis dated April 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case.
Business
1 answer:
Masteriza [31]3 years ago
4 0

Answer:

Somerset Computer Company

Differential Analysis dated April 30:

                                                 Make                  Buy      

                                            Alternative 1    Alternative 2    Difference

Variable cost per unit           $23.00                $62.00           $39.00

Explanation:

a) Data and Calculations:

Purchase price per portable computer carrying case = $62

Unit cost of production:

Direct materials                                     $8.00

Direct labor                                            12.00

Factory overhead (40% of direct labor) 4.80

Total cost per unit                              $24.80

Unit cost of production, with overhead broken into fixed and variable:

Direct materials                                     $8.00

Direct labor                                            12.00

Factory overhead

Fixed overhead                                       1.80

Variable overhead                                 3.00

Total cost per unit                             $24.80

b) With a net gain of $39 per unit, the company should make the unit (Alternative 1) instead of buying it (Alternative 2).

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Answer:

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Equivalent taxable yield = Tax exempt yield / (1 - marginal tax rate)  

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Equivalent taxable yield = 0.064 / 0.70

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3 0
3 years ago
Cabell Products is a division of a major corporation. Last year the division had total sales of $25,320,000, net operating incom
aalyn [17]

Answer:

ROI = Net operating income        x 100

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The correct answer is C

Explanation:

ROI is the ratio of net operating income to average operating assets multiplied by 100.

3 0
3 years ago
Jill wants to add an additional drive to her portable computer. she has a spare 1-tb sata hdd. given such scenario, what would e
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8 0
3 years ago
Nix’It Company’s ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Nix
Mkey [24]

Answer:

July 31

Shrinkage Expense $1,800    ($44,300 - $42,500)

Inventory  $1,800 Reflects the loss on inventory account.

Explanation:

When the company conduct a physical inventory of their merchandise, most of the time there are discrepancies between physical counts and books values, then it's necessary to reflect that in the accounting,

The correct way is to reflect the difference as a loss in there is less units of goods or as profit if there more units, it's mostly a loss because of damage or theft.

To this case the total amount on the books on July 31 was $44,300 but when the physical counts was made the result was a total value of $42,500, the difference of $1,800 it's reported as a loss to the company in the income statement.

5 0
2 years ago
On May 26, 2015, Jamal purchased machinery for $30,000 to be used in his business. He did not elect to expense the equipment und
Kruka [31]

Answer:

$1340

Explanation:

= 30,000 * 8.93% * 1/2

= 2679 * 1/2

= 1339.5

= $1340

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2 years ago
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