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I got different answers from different tutors for these activities and don't know who to follow can someone explain the correct method and explanation foe
I got different answers from different tutors for these activities and don't know who to follow can someone explain the correct method and explanation foe for it, please.
TEST 11 PROBLEM SOLVING 30 points A. 3 points Zoom Manufactlning had always made its components inhnuse. However, Brent Component Works had recently offered to supply one component, K3, at a price of P2300 each. Zoom uses 10,000 units of Component K3 each year. The cost per unit of this component is as follows: Direct materials P 12.00 Direct labor 8.25 Variable overhead 4.50 Fixed overhead E Total P 26.?5 Additional infomotion: The xed overhead is an allocated expense; none of it would be eliminated if production of Component K3 stopped. REQUIRED: 1. What are the alternatives facing Zoom Manufacturing with respect to production of Component K3? 2. List the relevant costs for each altemave. If Zoom decides to purchase the component from Brent, by how much will operating income or decrease? 3. Which alternative is better? B. 5 points Smash Company manufactures professional papenveights and has been approached by a new customer with an offer to purchase 15,000 units at a perunit price of P7.00.Tbe new customer is geographically separated from Smash's other customers, and existing sales will not be affected. Smash normally produces 82,000 units but plans to produce and sell only 65,000 units in the coming year. The normal sales price is P12.00 per unit. Unit cost information is as follows: Direct materials P 3.10 Direct labor 2.25 Variable overhead 1.15 Fixed overhead E Total P' i If Smash accepts the order, no xed manufacturing activities will be affected because there is sufficient excess capacity. REQUIRED: 1. What are the alternatives for Smash Company? 2. Should Smash accept the special order? By how much will prot increase or decrease if the order is acceptedStep by Step Solution
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