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Accounting Question: Please see attachment...Assume Dentech is able to rent out all its idle capacity for $90,000 per month. If Dentech decides to purchase the
Accounting Question: Please see attachment...Assume Dentech is able to rent out all its idle capacity for $90,000 per month. If Dentech decides to purchase the 14 units from Scott Supply, Dentechs monthly cost for RM67 would increase
Dentech, Inc., uses 14 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 $ 2,000 400 39,000 58,50 Manufacturing overhead (150% of direct labor) 0 Total manufacturing cost $99,900 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 $60,000. 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 $11,100 Question Assume Dentech is able to rent out all its idle capacity for $90,000 per month. If Dentech : decides to purchase the 14 units from Scott Supply, Dentech's monthly cost for RM67 would increase (oStep by Step Solution
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