Gelb Company currently makes a key part for its main product. Making this part incurs per unit variable costs of $1.30 for direct materials and $0.85 for direct labor. Incremental overhead to make this part is $1.44 per unit. The company can buy the part for $3.76 per unit. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Gelb make or buy the part? (a) Make or Buy Analysis Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should: Make Buy

Gelb Company currently makes a key part for its main product. Making this part incurs per unit variable costs of $1.30 for direct materials and $0.85 for direct labor. Incremental overhead to make this part is $1.44 per unit. The company can buy the part for $3.76 per unit. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Gelb make or buy the part? (a) Make or Buy Analysis Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should: Make Buy

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Gelb Company currently makes a key part for its main product. Making this part incurs per unit variable costs of $1.45 for direct materials and $1.00 for direct labor. Incremental overhead to make this part is $1.50 per unit. The company can buy the part for $4.15 per unit. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Gelb make or buy the part? (a) Make or Buy Analysis Direct materials Direct labor Overhead Cost to buy Cost per unit Make Buy Cost difference (b) Company should:
Ptarmigan Company produces two products. Product A has a contribution margin of $44.00 and requires 8 machine hours. Product B has a contribution margin of $67.20 and requires 12 machine hours. Determine the most profitable product assuming the machine hours are the constraint. If required, round your answers to two decimal places. Contribution margin per machine hour: Product A $ Product B $ Product is the most profitable.
(a) Prepare a make of buy uhury Gelb Co. currently makes a key part for its main product. Making this part incurs per unit variable costs of $1.20 for direct materials and $0.75 for direct labor. Incremental overhead to make this part is $1.40 per unit. The company can buy the part for $3.50 per unit, (a) Prepare a make or buy analysis of costs for this (b) Should Gelb make or buy the part? part. Exercise 23-2 Make or buy P1
Wheeler Company can produce a product that incurs the following costs per unit: direct materials, $10.50; direct labor, $24.50, and incremental overhead, $9.30. An outside supplier has offered to sell the product to Wheeler for $47.60. Compute the net incremental cost or savings of buying.
The internal manufacturing cost per unit of a component is as follows – Direct Material $5.00 Direct Labour $10.00 Fixed costs $15.00 Total costs $30.00 (a) Given the information above, if the company buys the component, it would however have to pay $17.00, but would still have to meet its fixed cost. Should the company make or buy the component? (b) Based on your answer in (a) above name two factors that can influence the company to buy the product. 2. (a) Describe two (2) methods for allocating support costs to departments. (b) Explain why support costs are allocated to departments. Please answer question 2 thank you very much.
The internal manufacturing cost per unit of a component is as follows – Direct Material $5.00 Direct Labour $10.00 Fixed costs $15.00 Total costs $30.00 (a) Given the information above, if the company buys the component, it would however have to pay $17.00, but would still have to meet its fixed cost. Should the company make or buy the component? (b) Based on your answer in (a) above name two factors that can influence the company to buy the product. 2. (a) Describe two (2) methods for allocating support costs to departments. (b) Explain why support costs are allocated to departments.
2.) A company currently buys a key part for a product it manufactures. The company buys the part for $5 per unit and believes it can make the part for $1.50 per unit for direct materials and $2.50 per unit for direct labor. The company allocates overhead costs at the rate of 50% of direct labor. Incremental overhead costs to make this part are $0.75 per unit. Should the company make or buy the part? Create a Total Cost per unit comparison for make or buy options.
Han Products manufactures 30,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials $ 5.10 Direct labor 7.00 Variable manufacturing overhead 2.40 Fixed manufacturing 18.00 overhead 32.50 Total cost per part An outside supplier has offered to sell 30,000 units of part S-6 each year to Han Products for $46.50 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $767,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier.
A company currently pays $5 per unit to buy a key part for a product it manufactures. It can make the part for $1.50 per unit for direct materials and $2.50 per unit for direct labor. The company normally allocates overhead costs at the rate of 50% of direct labor. Incremental overhead costs to make this part are $0.75 per unit. Should the company make or buy the part?
Ptarmigan Company produces two products. Product A has a contribution margin of $209.00 and requires 10 machine hours. Product B has a contribution margin of $124.20 and requires 6 machine hours. Determine the most profitable product assuming the machine hours are the constraint. If required, round your answers to two decimal places. Contribution margin per machine hour: Product A $fill in the blank 1 Product B $fill in the blank 2 Product is the most profitable.
Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10.50; direct labor, $14.50, and incremental overhead $3.50. An outside supplier has offered to sell the product to Paxton for $37.00. Compute the net incremental cost or savings of buying the component. Multiple Choice $3.50 cost per unit $8 5 savings per unit. $0 cost or savings per unit $8.50 cost per unit. $3.50 savings per unit
Bright Force Inc. produces and sells lightning fixtures. An entry light has a total cost of $90 per unit, of which $50 is product cost and $40 is selling and administrative expenses. In addition, the total cost of $90 is made up of $55 variable cost and $35 fixed cost. The desired profit is $20 per unit. Determine the markup percentage on product cost.