by automatically generating shipping forms
C. Marginal Cost
Marginal cost is the <em>additional </em>cost to produce each unit of a good.
Answer:
It is cheaper to make the part in house.
Explanation:
Giving the following information:
Harrison Enterprises currently produces 8,000 units of part B13.
Current unit costs for part B13 are as follows:
Direct materials $12
Direct labor 9
Factory rent 7
Administrative costs 10
General factory overhead (allocated) 7
Total $45
If Harrison decides to buy part B13, 50% of the administrative costs would be avoided.
To calculate whether it is better to make the par in-house or buy, we need to determine which costs are unavoidable.
Unavoidable costs:
Factory rent= 7
Administrative costs= 5
General factory overhead= 7
Total= 17
Now, we can calculate the unitary cost of making the product in-house:
Unitary cost= direct material + direct labor + avoidable administrative costs
Unitary cost= 7 + 5 + 5= $17
It is cheaper to make the part in house.
Answer:
The operating profit for this year amounts to $ 550,000
Explanation:
Operating Profit is computed below as:
Operating Profit = Revenue - Expense (Fixed Cost + Variable Cost)
= $1,950,000 - ($200,000 + $1,200,000)
= $1,950,000 - $1,400,000
= $550,000
Revenue = Number of frozen dinners × Selling Price
= 150,000 × $13
= $1,950,000
Variable Cost = Number of frozen dinners × Cost per frozen dinner
= 150,000 × $8
= $1,200,000
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Learn more about Vulnerability here
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