Question
Hi, can I please have the correct answers for each of these, dont need to show ur works: 1, Barrus Corporation makes 31,000 motors to
Hi, can I please have the correct answers for each of these, dont need to show ur works:
1, Barrus Corporation makes 31,000 motors to be used in the productions of its power lawn mowers. The average cost per motor at this level of activity is as follows: |
Direct materials | $9.00 |
Direct labor | $8.00 |
Variable manufacturing overhead | $3.20 |
Fixed manufacturing overhead | $4.15 |
This motor has recently become available from an outside supplier for $22.45 per motor. If Barrus decides not to make the motors, none of the fixed manufacturing overhead would be avoidable and there would be no other use for the facilities. If Barrus decides to continue making the motor, how much higher or lower will the company's net operating income be than if the motors are purchased from the outside supplier? Assume that direct labor is a variable cost in this company. |
$58,900 lower
$168,950 higher
$69,750 higher
$128,650 higher
2, Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 11,000 cases of sauce each year but is currently only manufacturing and selling 9,900. The following costs relate to annual operations at 9,900 cases: |
Total Cost | |
Variable manufacturing cost | $99,000 |
Fixed manufacturing cost | $47,000 |
Variable selling and administrative cost | $39,600 |
Fixed selling and administrative cost | $29,000 |
Gwinnett normally sells its sauce for $25 per case. A local school district is interested in purchasing Gwinnett's excess capacity of 1,100 cases of sauce but only if they can get the sauce for $13 per case. This special order would not affect regular sales or total fixed costs or variable costs per unit. If this special order is accepted, Gwinnett's profits for the year will: |
increase by $440
decrease by $1,100
decrease by $9,900
decrease by $5,500
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