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Msata Electronics Ltd makes a hand - held calculator for business applications. Budgeted financial data for this protuct line for the coming year are shown
Msata Electronics Ltd makes a handheld calculator for business applications. Budgeted financial data for this protuct line for the coming year are shown below: Sales units is Cost of goods manufactured and sold: Direct materials ait Direct labour & Fixed factory overhead ai Ciross margin Operating expenses: Operating income Fach calculator takes an electronic component which the company estimates accounts fort of direct materials costs, of direct labour and of variable overhead cost per completed calculator. Lugobar Electronies has approached Msala Lid with an offer to make the electruaic component for each. If Msata Lid accepts Lugoba's offer, their estimate they could cut their fixed manufacturing overhead by the following amounts: i Supervisory salaries and fringe benefits ii Heating and lighting costs as they would no longer use the section of the building in which the component is now being manufacturod iii Depreciation as they would stop using certain equipment, since there is no ready markel for it because of its age Note: the fixed factory overhead above is based on a volume of units at each. Required: a Should the offer from Lugola be accepted? Give clear reasons for your answer. showing all necessary calculations.
Msata Electronics Ltd makes a handheld calculator for business applications. Budgeted financial data for this protuct line for the coming year are shown below:
Sales units is
Cost of goods manufactured and sold:
Direct materials ait
Direct labour &
Fixed factory overhead ai
Ciross margin
Operating expenses:
Operating income
Fach calculator takes an electronic component which the company estimates accounts fort of direct materials costs, of direct labour and of variable overhead cost per completed calculator.
Lugobar Electronies has approached Msala Lid with an offer to make the electruaic component for each. If Msata Lid accepts Lugoba's offer, their estimate they could cut their fixed manufacturing overhead by the following amounts:
i Supervisory salaries and fringe benefits
ii Heating and lighting costs as they would no longer use the section of the building in which the component is now being manufacturod
iii Depreciation as they would stop using certain equipment, since there is no ready markel for it because of its age
Note: the fixed factory overhead above is based on a volume of units at each.
Required:
a Should the offer from Lugola be accepted? Give clear reasons for your answer. showing all necessary calculations.
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