1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
3241004551 [841]
2 years ago
12

Xia Co. currently buys a component part for $5 per unit. Xia believes that making the part would require $2.25 per unit of direc

t materials and $1.00 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 200% of direct labor cost. Xia estimates an incremental overhead rate of $0.75 per unit to make the part. 1-a. What are the relevant costs for Xia to make or buy the part? (Round your answers to 2 decimal places.) 1-b. Should Xia make or buy the part?
Business
1 answer:
belka [17]2 years ago
8 0

Answer:

Xia Co.

1-a. The relevant costs for Xia Co. to make or buy the part:

Direct materials         $2.25

Direct labor                   1.00

Incremental overhead 0.75

Total relevant cost   $4.00

1-b. Xia should make the part.  It will cost Xia $4.00 to make the component while it costs it $5.00 to buy.  It should therefore, make the component.

Explanation:

a) Data and Calculations:

Price of buying component = $5

Cost of making component:

Direct materials         $2.25

Direct labor                   1.00

Incremental overhead 0.75

Total relevant cost    $4.00

b) The relevant cost for making the component is $4.00.  The overhead cost based on 200% direct labor is not a relevant cost.  It is an allocated fixed cost and must be incurred whatever decision is taken.  By making the component, Xia Co. will be netting in a unit contribution of $1 ($5.00 - $4.00) with the alternative of buying.

You might be interested in
Consuela noticed significant growth in the hispanic population in her mid-size town. the local grocery carried mostly traditiona
oksian1 [2.3K]
The kind of startup that her store is considered to be is a new market idea. New market ideas are techniques or ideas that are employed or thought of as a way of strategizing and a way of improving one's business or store. In which Consuela engages to as she decided to have a new idea for a way of improving her store and for the sake of her customers.
3 0
3 years ago
Which of the following best describes the concept of elastic demand?
Trava [24]
------------------elasticity of demand<span> measures the sensitivity of the quantity demanded to changes in the price</span>
4 0
3 years ago
Write an essay on 'teachers and students'​
faust18 [17]

Answer:

A teacher is a beautiful gift given by god because god is a creator of the whole world and a teacher is a creator of a whole nation. A teacher is such an important creature in the life of a student, who through his knowledge, patience and love gives a strong shape to student's whole life.

8 0
2 years ago
During periods of decreasing costs, the use of the LIFO method of costing inventory will result in a lower amount of net income
gladu [14]

Answer:

b. False

Explanation:

LIFO stand for Last in First Out. This means LIFO inventory valuation is based on earlier goods purchased.

So, when costs are decreasing, they are affecting latter prices and this usually affect FIFO (First in First Out) not LIFO.

7 0
3 years ago
In response to the increase in demand for organic foods, Wegmans, Inc., a regional supermarket, recently created organic food de
Ghella [55]

Answer:

The correct answer is letter "B": market opportunity.

Explanation:

A market opportunity represents an external factor -typically a problem- that potentially could create a business opportunity for a company. In some cases, the market opportunity pushes firms to innovate in products tailor-made to cover the need in question or to adapt an existing product to that need.

4 0
3 years ago
Other questions:
  • When i was fifteen, i asked my mom if i could go visit my cousin, who lived across the country. "if you can [wol] up enough baby
    8·2 answers
  • find examples of how intelligent systems can facilitate activities such as empowerment, mass customization, and teamwork
    13·1 answer
  • PLEASE HELP ME
    12·1 answer
  • On July 1, 2017, Markie purchased a ten-year $10,000 bond. The bond has a stated interest rate of 4%, payable annually on July 1
    5·1 answer
  • Storm, Inc. purchased the following available-for-sale securities during 2016, its first year of operations:
    11·1 answer
  • Your university has decided to purchase new computers for all of the computer labs on campus. Typically, the purchasing agent ne
    6·1 answer
  • A new client in the medical–surgical unit complains of difficulty sleeping and is scheduled for an exploratory laparotomy in the
    9·1 answer
  • __________is a process whereby companies compare their practices and performance measurements to those of other companies.
    13·1 answer
  • President Bigego is running for re-election against Senator Pander. Bigego proclaims that more people are working now than when
    13·1 answer
  • Sheffield Corp. adopted the dollar-value LIFO method of inventory valuation on December 31, 2019. Its inventory at that date was
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!