Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An outside supplier has offered to make the part and sell it to the company for $35.00 each. If this offer is accepted, the supervisor's

An outside supplier has offered to make the part and sell it to the company for $35.00 each. If this offer is accepted, the supervisor's salary can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer was accepted, $3,700 of these allocated general overhead costs would unavoidable. In addition, the space used to produce part M15 could be used to make more of one of the company's other products, generating an additional segment margin of $14,200 per year for that product. Required: a. What is the financial advantage (disadvantage) of accepting the outside supplier's offer? Would Golden Company he financially hetter off to continue making nart M15 or to her it from Click Save and Submit to save and submit. Click Save All Answers to save all answers Save and Submit JOVE PRES Golden Company uses part M15 in one of its products. The company's Accounting Departme reports the following costs of producing the 3,250 units of the part that are needed every year. Per Unit Direct materials $7.75 Direct labor $6.20 Variable overhead $9.00 Supervisor's salary $5.20 Depreciation of special equipment $3.50 Allocated general overhead $1.90 Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Save and Submit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cima Official Learning System Financial Operations

Authors: Jo Watkins

6th Edition

1856177912, 978-1856177917

More Books

Students also viewed these Accounting questions