Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pharoah Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used in each of its systems. Based

image text in transcribed

image text in transcribed

Pharoah Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used in each of its systems. Based on an annual production of 48,000 timers, the company has calculated the following unit costs. Direct fixed costs include supervisory and clerical salaries and equipment depreciation. Clifton Clocks has offered to provide the timer units to Pharoah at a price of $36 per unit. If Pharoah accepts the offer, the current timer unit supervisory and clerical staff will be laid off. (a1) Calculate the total relevant cost to make or buy the timer units. (Round answers to 0 decimal places, e.g. 5,250.) Assuming that Pharoah Water has no other use for either the facilities or the equipment currently used to manufacture the timer units, should the company accept Clifton's offer? eTextbook and Media Attempts: 0 of 3 used b1) Assume that if Pharoah Water accepts Clifton's offer, the company can use the freed-up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sell 90,700 of the new lights each year at a price of $13. Variable costs of line. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer. Total relevant cost to make $ Net relevant cost if they accept Clifton's offer

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Standards On Auditing An Institutional Driver For Audit Quality

Authors: Dries Schockaert

1st Edition

2874035467, 978-2874035463

More Books

Students also viewed these Accounting questions

Question

Approaches to Managing Organizations

Answered: 1 week ago

Question

Communicating Organizational Culture

Answered: 1 week ago