Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume a company is considering buying 10,000 units of a component part rather than making them. A supplier has agreed to sell the company 10.000

image text in transcribed

Assume a company is considering buying 10,000 units of a component part rather than making them. A supplier has agreed to sell the company 10.000 units for a price of $40 per unit. The company's accounting system reports the following costs of making the part Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per Unit $18 12 2 8 10,000 Units per Year $190,000 120,000 20,000 80,000 40,000 $440,000 $44 One-half of the traceable fixed manufacturing overhead relates to supervisory salaries and the remainder relates to depreciation of equipment with no salvage value. If the company chooses to buy this component part from a supplier, then the supervisor who oversees its production would be discharged. If the company begins buying the part from a supplier, it can use freed up capacity to produce and sell 2,000 more units of another product that eams e contribution mergin per unit of $7.00. What is the financial advantage (disadvantage) of buying 10,000 units from the supplier? Multipla Chalca $125,000 $16000 o o o $132.0001 $160,000

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

International Corporate Reporting Global And Diverse

Authors: Pauline Weetman, Ioannis Tsalavoutas, Paul Gordon

5th Edition

1138364991, 9781138364998

More Books

Students also viewed these Accounting questions

Question

Why are positive stereotypes harmful?

Answered: 1 week ago

Question

Discuss the various types of policies ?

Answered: 1 week ago

Question

Briefly explain the various types of leadership ?

Answered: 1 week ago

Question

Explain the need for and importance of co-ordination?

Answered: 1 week ago

Question

Explain the contribution of Peter F. Drucker to Management .

Answered: 1 week ago