Question
Crane Company manufactured 4,920 units of a component part that is used in its product and incurred the following costs: Direct materials $28,700 Direct labor
Crane Company manufactured 4,920 units of a component part that is used in its product and incurred the following costs:
Direct materials | $28,700 | ||
Direct labor | 12,300 | ||
Variable manufacturing overhead | 8,200 | ||
Fixed manufacturing overhead | 16,400 | ||
$65,600 |
Another company has offered to sell the same component part to the company for $13 per unit. The fixed manufacturing overhead consists mainly of depreciation on the equipment used to manufacture the part and would not be reduced if the component part was purchased from the outside firm. If the component part is purchased from the outside firm, Crane Company has the opportunity to use the factory equipment to produce another product which is estimated to have a contribution margin of $18,040. Prepare an incremental analysis report for Crane Company which can serve as informational input into this make or buy decision. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0 for the amounts.)
Make | Buy | Increase (Decrease) | |||||
---|---|---|---|---|---|---|---|
select an item Direct LaborTotal CostVariable Manufacturing OverheadOpportunity CostTotal Annual CostPurchase PriceDirect MaterialsFixed Manufacturing Overhead | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | ||||
select an item Fixed Manufacturing OverheadTotal Annual CostPurchase PriceOpportunity CostDirect LaborTotal CostDirect MaterialsVariable Manufacturing Overhead | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
select an item Purchase PriceDirect MaterialsDirect LaborOpportunity CostTotal Annual CostVariable Manufacturing OverheadTotal CostFixed Manufacturing Overhead | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
select an item Total Annual CostFixed Manufacturing OverheadTotal CostVariable Manufacturing OverheadDirect MaterialsDirect LaborPurchase PriceOpportunity Cost | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
select an item Variable Manufacturing OverheadTotal Annual CostPurchase PriceDirect MaterialsOpportunity CostFixed Manufacturing OverheadDirect LaborTotal Cost | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
select a summarizing line for the first part Purchase PriceOpportunity CostTotal Annual CostVariable Manufacturing OverheadFixed Manufacturing OverheadTotal CostDirect MaterialsDirect Labor | enter a total amount for the first part | enter a total amount for the first part | enter a total amount for the first part | ||||
select an item Opportunity CostTotal Annual CostFixed Manufacturing OverheadDirect LaborTotal CostVariable Manufacturing OverheadPurchase PriceDirect Materials | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
select a closing name for this report Purchase PriceDirect MaterialsTotal Annual CostDirect LaborVariable Manufacturing OverheadOpportunity CostFixed Manufacturing OverheadTotal Cost | $enter a total amount for this report | $enter a total amount for this report | $enter a total amount for this report |
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