Question
is a popular car-wash operation that measures its activity in terms of number of cars washed. Last month, the budgeted level of activity was 1,200
is a popular car-wash operation that measures its activity in terms of number of cars washed. Last month, the budgeted level of activity was 1,200 cars washed and the actual level of activity was 1,190 cars washed. The cost formula for the washing expenses is $4.40 per car washed plus $24,000 per month. The actual 's washing expense was $23,500. (Q) What was the 's spending variance for the washing expenses last month? Corporation makes an extra large part to use in one its fabulous products. A total of 22,000 units of this extra large part are produced and used every year. The company's costs of producing the extra large part at this level of activity are below: Per Unit Direct materials $4.70 Direct labor $9.30 Variable manufacturing overhead $9.80 Supervisor's salary $5.20 Depreciation of special equipment $3.60 Allocated general overhead $8.80 An outside supplier has offered to make the extra large part and sell it to for $31.90 each, If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the extra large part has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make the extra large part could be used to make more of one of the company's other fabulous products, generating an additional segment margin of $34,000 per year for that product (Q) What would be the annual financial advantage (disadvantage) for outside supplier? 1 Corp as a result of buying the extra large part from the
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started