Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Dionne currently manufactures a subcomponent that is used in its main product. A supplier has offered to supply all the subcomponents needed at a price

Dionne currently manufactures a subcomponent that is used in its main product. A supplier has offered to supply all the subcomponents needed at a price of $121. Dionne currently produces 20,200 subcomponents at the following manufacturing costs:

Per unit
Direct materials $ 42
Direct labor 32
Variable manufacturing overhead 35
Fixed manufacturing overhead 16
Unit cost 125
a.

If Dionne has no alternative uses for the manufacturing capacity, what would be the profit impact of buying the subcomponents from the supplier? (Input the amount as positive value. Omit the "$" sign in your response.)

(Click to select) More or Less profit? $
b.

If Dionne has no alternative uses for the manufacturing capacity, what would be the maximum price per unit they would be willing to pay the supplier? (Omit the "$" sign in your response.)

Maximum price $ per unit
c.

Now assume Dionne would avoid $320,000 in equipment leases and salaries if the subcomponent were purchased from the supplier. Now what would be the profit impact of buying from the supplier? (Input the amount as positive value. Omit the "$" sign in your response.)

(Click to select) Less or More profit? $

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

Step: 3

blur-text-image

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

Auditing Concepts For A Changing Environment

Authors: Larry E. Rittenberg, Bradley J. Schwieger

5th Edition

0324223102, 978-0324223101

More Books

Students also viewed these Accounting questions

Question

=+ Is the information documented and verifiable?

Answered: 1 week ago

Question

=+ Is the information presented in an objective manner?

Answered: 1 week ago