Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
Assume a comparvy is considering buying 10.000 units of a component part rather than making them. A suppler has agreed to set the company 10.000
Assume a comparvy is considering buying 10.000 units of a component part rather than making them. A suppler has agreed to set 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 10,000 Unit Per Unit per Tear Direct materiale $ 18 $ 180,000 Direct labor 12 120,000 Variable manufacturing overhead 2 20,000 Pixed manufacturing overhead, traceable 8 80,000 Tixed manufacturing overhead, allocated 4 40,000 Total cont $ 44 $ 440,000 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 2,050 more units of another product that earns a contribution margin per unit of $700. What is the financial advantage (disadvantage of buying 10,000 units from the supplier
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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