Answered step by step
Verified Expert Solution
Question
1 Approved Answer
4 value: 10.00 points Dentech, Inc., uses 11 units of part RM67 each month in the production of dentistry equipment. The cost of manufacturing one
4 value: 10.00 points Dentech, Inc., uses 11 units of part RM67 each month in the production of dentistry equipment. The cost of manufacturing one unit of RM67 is the following: Direct material Material handling (20% of direct-material cost) Direct labor Manufacturing overhead (150% of direct labor) $2,500 500 27,000 40.500 Total manufacturing cost $70,500 Material handling represents the direct variable costs of the Receiving Department that are applied to direct materials and purchased components on the basis of their cost. This is a separate charge in addition to manufacturing overhead. Dentech's annual manufacturing overhead budget is one-third variable and two- thirds fixed. Scott Supply, one of Dentech's reliable vendors, has offered to supply part number RM67 at a unit price of $47,000 Required 1. If Dentech purchases the RM67 units from Scott, the capacity Dentech used to manufacture these parts would be idle. Should Dentech decide to purchase the parts from Scott, the unit cost of RM67 would increase (or decrease) by what amount? per unit 2. Assume Dentech is able to rent out all its idle capacity for $77,000 per month. If Dentech decides to purchase the 11 units from Scott Supply, Dentech's monthly cost for RM67 would increase (or decrease) by what amount? per month 3. Assume that Dentech does not wish to commit to a rental agreement but could use its idle capacity to manufacture another product that would contribute $161,000 per month. If Dentech's management elects to manufacture RM67 in order to maintain quality control, what is the net amount of Dentech's cost from using the space to manufacture part RM67? et cost of using limited capacity to produce part RM67
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started