Utica Company, Crown could not use the released facilities in another manufacturing activity within the coming year. 60% of the fixed overhead applied will continue regardless of which decision option is chosen. The following per-unit cost information to make the part by Crown is available: Direct materials Direct labor Variable overhead Fixed overhead applied Multiple Choice Cost to buy the part from Utica Company In deciding whether to make or buy the part, Crown's total relevant cost to make the part would be: O$642.000 $ 16 $780,000 34 22 15 $ 87 $ 83

Utica Company, Crown could not use the released facilities in another manufacturing activity within the coming year. 60% of the fixed overhead applied will continue regardless of which decision option is chosen. The following per-unit cost information to make the part by Crown is available: Direct materials Direct labor Variable overhead Fixed overhead applied Multiple Choice Cost to buy the part from Utica Company In deciding whether to make or buy the part, Crown's total relevant cost to make the part would be: O$642.000 $ 16 $780,000 34 22 15 $ 87 $ 83

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...

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Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for 66 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows: Prior to making a decision, the companys CEO commissioned a special study to see whether there would be any decrease in the fixed overhead costs. The results of the study revealed the following: 3 setups1,160 each (The setups would be avoided, and total spending could be reduced by 1,160 per setup.) One half-time inspector is needed. The company already uses part-time inspectors hired through a temporary employment agency. The yearly cost of the part-time inspectors for the track assembly operation is 12,300 and could be totally avoided if the part were purchased. Engineering work: 470 hours, 45/hour. (Although the work decreases by 470 hours, the engineer assigned to the track assembly line also spends time on other products, and there would be no reduction in his salary.) 75 fewer material moves at 30 per move. Required: 1. Ignore the special study, and determine whether the track assembly should be produced internally or purchased from the supplier. 2. Now, using the special study data, repeat the analysis. 3. Discuss the qualitative factors that would affect the decision, including strategic implications. 4. After reviewing the special study, the controller made the following remark: This study ignores the additional activity demands that purchasing would cause. For example, although the demand for inspecting the part on the production floor decreases, we may need to inspect the incoming parts in the receiving area. Will we actually save any inspection costs? Is the controller right?
Box Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen is $35 per unit and $55 is used in direct labor, while the direct material for the king is $55 per unit, and the labor cost is $70 per unit. Box Springs estimates it will make 4,300 queens and 3,000 kings in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?
The following product costs are available for Stellis Company on the production of erasers: direct materials, $22,000; direct labor, $35,000; manufacturing overhead, $17,500; selling expenses, $17,600; and administrative expenses; $13,400. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 13,750 equivalent units are produced, what is the equivalent material cost per unit? If 17,500 equivalent units are produced, what is the equivalent conversion cost per unit?
The following product Costs are available for Haworth Company on the production of chairs: direct materials, $15,500; direct labor, $22.000; manufacturing overhead, $16.500; selling expenses, $6,900; and administrative expenses, $15,200. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 7,750 equivalent units are produced, what is the equivalent material cost per unit? If 22,000 equivalent units are produced, what is the equivalent conversion cost per unit?
Crown Company, which needs 10,000 units of a certain part to be used in its production cycle, can make or buy the part. If Crown buys the part from Utica Company, Crown could not use the released facilities in another manufacturing activity within the coming year. 60% of the fixed overhead applied will continue regardless of which decision option is chosen. The following per-unit cost information to make the part by Crown is available: Direct materials $ 23 Direct labor 41 Variable overhead 29 Fixed overhead applied 15 $ 108 Cost to buy the part from Utica Company $ 104 In deciding whether to make or buy the part, Crown's total relevant cost to make the part would be: Multiple Choice $852,000. $990,000. $1,040,000. $1,080,000. Some amount other than these choices.
Crane Manufacturing Company Inc. uses 640 units of Part # 4317 each year in the manufacture of one of its products. The company currently produces the part internally, but an outside supplier has offered to provide the part at a price of $100 per part. If Crane chooses to purchase the part from the outside supplier, one third of it's the fixed manufacturing overhead will be eliminated. The company's standard unit cost of producing the part is listed below. Direct material Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost $32 30 29 33 Crane $124 Ignoring qualitative factors, should Crane continue to make the parts internally or purchase them from the outside supplier? ✓ continue to make the part.
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $21, computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost An outside supplier has offered to provide the annual requirement of 4,400 of the parts for only $10 each. The company estimates that 50% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be: Multiple Choice $8 7 2 4 $ 21 $9 per unit on average
Kingston Company, which needs 10,000 units of a certain part to be used in its production cycle, can make or buy the part. If Kingston buys the part from Utica Company, Kingston could not use the released facilities in another manufacturing activity within the coming year. 60% of the fixed overhead applied will continue regardless of which decision option is chosen. The following per-unit cost information to make the part by Kingston is available: Direct materials $ 31 Direct labor 124 Variable overhead 62 Fixed overhead applied 78 $ 295 Cost to buy the part from Utica Company $ 79 In deciding whether to make or buy the part, Kingston's total relevant cost to make the part would be: Multiple Choice $2,344,000. $2,482,000. $790,000. $2,950,000. Some amount other than these choices.
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $19, computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $7 5 2 5 $ 19 An outside supplier has offered to provide the annual requirement of 6,600 of the parts for only $15 each. The company estimates that 80% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:
Kando Company currently pays $14 per unit to buy a part for a product it manufactures. Instead, Kando could make the part for per unit costs of $6 for direct materials, $4 for direct labor, and $2 for incremental overhead. Kando normally applies overhead costs using a predetermined rate of 200% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. (b) Should Kando make or buy the part? Make Buy Direct materials Direct labor Overhead Cost to buy Cost per unit Company should:
An internally produced part is used by a company in making one of its products. A total of 21,500 units of this part are produced and used every year. The Accounting Department reports: Direct materials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead An outside vendor has offered to sell the part to the company for $31.50 each. If this offer is accepted, the supervisor's salary and all of the variable costs can be avoided. The special equipment used to make the part has no salvage value or other use. None of the allocated general overhead would be avoided if the part were purchased. Also, the space used to make the part could be used to make more of one of the company's other products, generating an additional segment margin of $33,500 per year. The financial advantage (disadvantage) for the company as a result of buying the part should be: Multiple Choice ($28,850) ($127,750) $33,500 Per Unit $ 4.60 $9.20 $…
Omega Corporation currently manufactures a component for its main product. The costs per unit are as follows: Sh. Direct materials 1.00 Direct labor 10.00 Variable overhead 5.00 Fixed overhead 8.00 Total 24.00 Zed Company has contacted Omega Company with an offer to sell them 5,000 of the components for sh. 22 each. Omega Company will eliminate sh. 25,000 of the fixed overhead if it accepts the order. should Omega company make or buy the component: . Select one: A. Make and save sh.5,000 B. Buy and save…