Question
Hello, hope all is well. Can you please check my work. It is from my Homework in Accounting Mangerial. Thank you. Mighty Safe Fire Alarm
Hello, hope all is well. Can you please check my work. It is from my Homework in Accounting Mangerial. Thank you.
Mighty Safe Fire Alarm is currently buying 61,000 motherboards from MotherBoard, Inc. at a price of $63 per board. Mighty Safe is considering making its own motherboards. The costs to make the motherboards are as follows: direct materials, $30 per unit; direct labor, $11 per unit; and variable factory overhead, $14 per unit. Fixed costs for the plant would increase by $84,000. Which option should be selected and why?
a.make, $488,000 increase in profits
b.buy, $84,000 more in profits
c.make, $403,820 increase in profits
d.buy, $403,820 more in profits
This one was B because it was cheaper. $84,000
Keating Co. is considering disposing of equipment with a cost of $74,000 and accumulated depreciation of $51,800. Keating Co. can sell the equipment through a broker for $33,000, less a 7% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $46,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is
a.$3,717
b.$6,372
c.$5,310
d.$7,965
This one is D 7,965. i did factor in the equipment cost etc.
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