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163-164 BE 163 Chuckie's Chunks produces fudge candy. It costs $0.20 to make each box in which the fudge is packaged. Of this cost, $0.12

163-164

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BE 163 Chuckie's Chunks produces fudge candy. It costs $0.20 to make each box in which the fudge is packaged. Of this cost, $0.12 is variable and $0.08 is fixed. A supplier offers to make the boxes for the fudge for $0.15 each. If the offer is accepted, Chuckie's will save all variable costs but no fixed costs. Chuckie's uses 2,000 boxes per year. Instructions Prepare an incremental analysis showing the total effect on costs if the boxes are bought instead of manufactured. BE 164 Wood Chuck Furniture currently manufactures rocking chairs as its main product. Each chair uses one seat cushion and one back cushion with the following costs per set of cushions (one seat and one back): Direct materials $ 1 Direct labor 10 Variable overhead 5 Fixed overhead 8 Total $24 Shepert Company has contacted Wood Chuck with an offer to sell it 5,000 sets of cushions for $18 each. If Wood Chuck makes the cushions, $5 of the fixed overhead per unit will be allocated to other products. Instructions Should Wood Chuck make or buy the cushions

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