Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

cation Exam (Chs. 5, 6, 7, 8) Question 3 of 5 -/12.5 View Policies Current Attempt in Progress Innova uses 1,000 units of the component

image text in transcribed
image text in transcribed
cation Exam (Chs. 5, 6, 7, 8) Question 3 of 5 -/12.5 View Policies Current Attempt in Progress Innova uses 1,000 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows. Direct materials $62.58 Direct labor 39.79 Overhead 126,50 Total $228.87 Overhead costs include variable material handling costs of $7.50, which are applied to products on the basis of direct material costs The remainder of the overhead costs are applied on the basis of direct labor dollars and consist of 60.00% variable costs and 40,00% fixed costs A vendor has offered to supply the IMC2 component at a price of $210.00 per unit. (a) Prepare the incremental analysis for the decision to make or buy IMC2. Assume that no fixed costs will be eliminated it production is outsourced. (Round answers to 2 decimal places, es 12.25. Enter negative amounts using either a negative sign preceding the number es-45 or parentheses es (451) Make IMC2 (per unit) Buy IMC2 (per unit) Net Income Increase (Decrease) Direct material $ Direct labor Material handling Variable overhead Fixed overhead Purchase price Total unit cost S $ Should Innova purchase the component from the outside vendor if Innova's unused facilities remain idle

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

Understanding Financial Accounting

Authors: Christopher D. Burnley

3rd Canadian Edition

1119715474, 9781119715474

More Books

Students also viewed these Accounting questions

Question

How are most students funded?

Answered: 1 week ago