Barnes Company makes 10,000 units of Part A per year The product cost of Part A is provided as follows Direct materials $30 unit Direct labor $15 unit Variable manufacturing overhead $ 5 unit Cost of manager who will not be fired if the firm no longer produces Part A $50,000 Depreciation per year of special equipment (with no resale value) $40,000 Other fixed manufacturing overhead for the whole company $200,000 The Other fixed manufacturing overhead for the whole company will not be affected by the decision to make or buy Part A If Barnes decides to purchase Part A, the facility can be used to produce another product that will generate a contribution margin of $8 unit An outside supplier has offered to sell the company 10,000 units of part A for $70 a unit What will be the change in Barnes Companys net income if it accepts this offer (Please provide step by step on how to drive the final answer otherwise, no point will be given ) Barnes Company makes 10,000 units of Part A per year The product cost of Part A is provided as follows Direct materials $30 unit Direct labor $15 unit Variable manufacturing overhead $5 unit Cost of manager who will not be fired if the firm no longer produces Part A$50,000 Depreciation per year of special equipment (with no resale value) $40,000 Other fixed manufacturing overhead for the whole company $200,000 The 'Other fixed manufacturing overhead for the whole company' will not be affected by the decision to make or buy Part A If Barnes decides to purchase Part A, the facility can be used to produce another product that will generate a contribution margin of $8 unit An outside supplier has offered to sell the company 10,000 units of part A for $70 a unit What will be the change in Barnes Company's net income if it accepts this offer (Please provide step by step on how to drive the final answer otherwise, no point will be given )

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 20, 2024

Barnes Company makes 10,000 units of Part A per year. The product cost of Part A is provided as follows: Direct materials $30/unit Direct labor

Barnes Company makes 10,000 units of Part A per year. The product cost of Part A is provided as follows:

Direct materials $30/unit

Direct labor ..$15/unit

Variable manufacturing overhead.$ 5/unit

Cost of manager who will not be fired if the firm no longer produces Part A ...$50,000

Depreciation per year of special equipment (with no resale value) ......... $40,000

Other fixed manufacturing overhead for the whole company .. .$200,000

The Other fixed manufacturing overhead for the whole company will not be affected by the decision to make or buy Part A.

If Barnes decides to purchase Part A, the facility can be used to produce another product that will generate a contribution margin of $8/unit.

An outside supplier has offered to sell the company 10,000 units of part A for $70 a unit. What will be the change in Barnes Companys net income if it accepts this offer?

(Please provide step-by-step on how to drive the final answer; otherwise, no point will be given.) image text in transcribed

Barnes Company makes 10,000 units of Part A per year. The product cost of Part A is provided as follows: Direct materials. $30 /unit Direct labor \$15/unit Variable manufacturing overhead.........\$5/unit Cost of manager who will not be fired if the firm no longer produces Part A$50,000 Depreciation per year of special equipment (with no resale value) $40,000 Other fixed manufacturing overhead for the whole company $200,000 The 'Other fixed manufacturing overhead for the whole company' will not be affected by the decision to make or buy Part A. If Barnes decides to purchase Part A, the facility can be used to produce another product that will generate a contribution margin of $8 /unit. An outside supplier has offered to sell the company 10,000 units of part A for $70 a unit. What will be the change in Barnes Company's net income if it accepts this offer? (Please provide step-by-step on how to drive the final answer; otherwise, no point will be given.)