Finch Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (14,800 Units x $29) Labor (14,800 Units $21) Depreciation on manufacturing equipment Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs Total cost to make 14,800 engines 429,200 310,800 a Maximum price per unit b Maximum price per unit t 29,000 85,000 12,000 87,000 $ 953,000 "The equipment has a book value of $108,000 but its market value is zero. Required a. Determine the maximum price per unit that Finch would be willing to pay for the engines. b. Determine the maximum price per unit that Finch would be willing to pay for the engines, if production increased to 18,850 units (For all requirements, Round your answers to 2 decimal places.)

Finch Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (14,800 Units x $29) Labor (14,800 Units $21) Depreciation on manufacturing equipment Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs Total cost to make 14,800 engines 429,200 310,800 a Maximum price per unit b Maximum price per unit t 29,000 85,000 12,000 87,000 $ 953,000 "The equipment has a book value of $108,000 but its market value is zero. Required a. Determine the maximum price per unit that Finch would be willing to pay for the engines. b. Determine the maximum price per unit that Finch would be willing to pay for the engines, if production increased to 18,850 units (For all requirements, Round your answers to 2 decimal places.)

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 1PB: Classify costs Cromwell Furniture Company manufactures sofas for distribution to several major...

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Rundle Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (13,400 Units × $16) $ 214,400 Labor (13,400 Units × $17) 227,800 Depreciation on manufacturing equipment* 26,000 Salary of supervisor of engine production 76,000 Rental cost of equipment used to make engines 10,000 Allocated portion of corporate-level facility-sustaining costs 86,000 Total cost to make 13,400 engines $ 640,200 *The equipment has a book value of $96,000 but its market value is zero. Required Determine the maximum price per unit that Rundle would be willing to pay for the engines. Determine the maximum price per unit that Rundle would be willing to pay for the engines, if production increased to 18,050 units?
Rundle Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (15,000 Units x $13) Labor (15,000 Units x $25) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines $ 195,000 375,000 40,000 74,000 19,000 80,000 783,000 The equipment has a book value of $107,000 but its market value is zero. Allocated portion of corporate-level facility-sustaining costs Total cost to make 15,000 engines Required a. Determine the maximum price per unit that Rundle would be willing to pay for the engines. b. Determine the maximum price per unit that Rundle would be willing to pay for the engines, if production increased to 18,000 units. (For all requirements, Round your answers to 2 decimal places.) a. Maximum price per unit b. Maximum price per unit
Zachary Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (14,700 units x $19) Labor (14,700 units × $25) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs Total cost to make 14,700 engines *The equipment has a book value of $101,000 but its market value is zero. Required $ 279,300 367,500 37,000 84,000 16,000 79,000 $ 862,800 a. Determine the maximum price per unit that Zachary would be willing to pay for the engines. b. Determine the maximum price per unit that Zachary would be willing to pay for the engines, if production increased to 18,350 units. Note: For all requirements, round intermediate and final answers to 2 decimal places. a. Maximum price per unit b. Maximum…
Gibson Company makes and sells lawn mowers for which it currently makes the engines, It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (14,700 Units x $17) Labor (14,700 Units x $17) Depreciation on manufacturing equipment Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs $ 249,900 249, 900 32,000 73,000 16,000 89,000 $ 709,800 Total cost to make 14,700 engines *The equipment has a book value of $97,000 but its market value is zero. JFZ Note: Is the Book Value of an asset (original cost - depreciation taken to date) ever relevant? No. Book vaiue is the result of a decision made in the past (I.e. Sunk). Required a. Determine the maximum price per unit that Gibson would be willing to pay for the engines (.e. where the cost would be the same and management would be "indifferent" between…
Fanning Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (13,100 Units × $22) $ 288,200 Labor (13,100 Units × $14) 183,400 Depreciation on manufacturing equipment* 38,000 Salary of supervisor of engine production 74,000 Rental cost of equipment used to make engines 24,000 Allocated portion of corporate-level facility-sustaining costs 81,000 Total cost to make 13,100 engines $ 688,600 *The equipment has a book value of $97,000 but its market value is zero. Required Determine the maximum price per unit that Fanning would be willing to pay for the engines. Determine the maximum price per unit that Fanning would be willing to pay for the engines, if production increased to 18,550 units? (For all requirements, round your intermediate calculations and final…
Zachary Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. $ 272,000 Cost of materials (13,600 Units x $20) Labor (13,600 Units x $30) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs 408,000 29,000 74,000 12,000 79,000 Total cost to make 13,600 engines $ 874,000 *The equipment has a book value of $106,000 but its market value is zero. Required a. Determine the maximum price per unit that Zachary would be willing to pay for the engines. b. Determine the maximum price per unit that Zachary would be willing to pay for the engines, if production increased to 17,900 units. (For all requirements, Round your answers to 2 decimal places.) a. Maximum price per unit b. Maximum price per unit
Munoz Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (13,300 Units × $19) Labor (13,300 Units × $19) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs Total cost to make 13,300 engines $ 252,700 252,700 22,000 74,000 20,000 85,000 $ 706,400 *The equipment has a book value of $96,000 but its market value is zero. Required a. Determine the maximum price per unit that Munoz would be willing to pay for the engines. b. Determine the maximum price per unit that Munoz would be willing to pay for the engines, if production increased to 18,950 units. (For all requirements, Round your answers to 2 decimal places.) a. Maximum price per unit b. Maximum price per unit
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