Question
Deutsche Telekom produces 6,000 telecom devices annually. The manufacturing cost per device is as follows: Direct materials: 25 Direct labor: 15 Variable manufacturing overhead: 10
Deutsche Telekom produces 6,000 telecom devices annually. The manufacturing cost per device is as follows:
- Direct materials: €25
- Direct labor: €15
- Variable manufacturing overhead: €10
- Fixed manufacturing overhead: €8
Siemens offers to supply 6,000 devices at €52 each. If accepted, Deutsche Telekom will save €18,000 in fixed overhead.
- Conduct a differential analysis to determine if Deutsche Telekom should make or buy the devices.
- Calculate the overall cost impact if the offer is accepted.
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Accounting Information Systems
Authors: Marshall B. Romney, Paul J. Steinbart
12th edition
132552620, 978-0132552622
