Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PLEASE ANSWER BOTH QUESTIONS CORRECTLY Xian Products manufactures 37,500 units of part S-6 each year for use on its production line. At this level of

image text in transcribed

image text in transcribed

PLEASE ANSWER BOTH QUESTIONS CORRECTLY

Xian Products manufactures 37,500 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is as follows: An outside supplier has offered to sell 33,000 units of part S-6 each year to Han Products for $24.25 per part. If Xian Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $90,000. However, Xian Products has determined that 30% of the fixed overhead being applied to part S-6 will be avoided if part S-6 is purchased from the outside supplier. Required: 1. What is the net dollar advantage or disadvantage of accepting the outside supplier's offer? (Round "Total costs" and final answer to the nearest whole dollar amount.) 2. What is the annual rental value at which the company will be indifferent between the two options? (Round "Total costs" and fina answer to the nearest whole dollar amount.)

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

Information For Decision Making Readings In Cost And Managerial Accounting

Authors: Alfred Rappaport

3rd Edition

0134643542, 978-0134643540

More Books

Students also viewed these Accounting questions