Question
P3. (make or buy) DD Company incurs the following costs in producing 10,000 covers. Direct material costs $20,000 Direct labor costs $50,000 Variable manufacturing overhead
P3. (make or buy) DD Company incurs the following costs in producing 10,000 covers.
Direct material costs $20,000
Direct labor costs $50,000
Variable manufacturing overhead $30,000
Fixed manufacturing overhead $40,000
Total manufacturing costs $140,000
Manufacturing costs / unit = $100,000 / 10,000 units = $14
If DD buys them, the purchasing cost would be $ 12/unit, and DD has to assume $26,000 of fixed manufacturing overhead.
Instruction) Prepare an analysis showing DD should make or buy the covers. And provide a recommendation.
P4. (cost-plus pricing) DD corporation produces air purifiers. The following per unit cost information is available: direct materials $10, direct labor $20, variable manufacturing overhead $25, variable selling and administrative expenses $15. Fixed selling and administrative expenses are $200,000, and fixed manufacturing overhead is $100,000.
Instructions:
1. Using a 40% markup percentage on the total cost per unit and assuming 10,000 units, compute the target selling price.
2. Using a 50% markup percentage on the total cost per unit and assuming 20,000 units, compute the target selling price.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started