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Assume a company is considering using available space to make 10,000 units of a component part that it has been buying from a supplier for
Assume a company is considering using available space to make 10,000 units of a component part that it has been buying from a supplier for a price of $40.50 per unit. The company's accounting system estimates 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 $17 12 2 B 4 $45 10,000 Units per Year $170,000 120,000 20,000 80,000 40,000 $430,000 One-half of the traceable fixed manufacturing overhead relates to a supervisor that would have to be hired to oversee production of the part. The remainder of the traceable fixed manufacturing overhead relates to depreciation of equipment that the company already owns. This equipment has 20,000 units of unused capacity, no resale value, and it does wear out through use. The allocated fixed manufacturing overhead relates to general overhead costs, such as the plant manager's salary, lighting, heating and cooling cos and plant insurance costs. What is the financial advantage (disadvantage) of making 10,000 units instead of buying them from the supplier? Multiple Choice O $120,000) $20,000 Assume the following: . The standard price per pound is $2.10. The standard quantity of pounds allowed per unit of finished goods is 4 pounds. . The actual quantity of materials purchased was 53,000 pounds, whereas the quantity of materials used in production was 50,400 pounds. . The actual purchase price per pound of materials was $2.25. The company produced 13,000 units of finished goods during the period. What is the materials quantity variance? Multiple Choice O $5,460 F $5,850 F $3,600 F $3,360 F Assume a company's estimated sales is 32,000 units. Its desired ending finished goods Inventory is 8,500 units, and its beginning finished goods Inventory is 3,500 units. What is the required production in units? Multiple Choice 44,000 units 28,500 units 20,000 units 0 37,000 units
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