Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please give solution within 20 minutes..as soon as possible Question No. 3 3+3=6 a) Ahringer Company makes 50,000 units per year of a part it

image text in transcribed

please give solution within 20 minutes..as soon as possible

Question No. 3 3+3=6 a) Ahringer Company makes 50,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials $17.80 Direct labor 23.70 Variable manufacturing overhead 3.10 Fixed manufacturing overhead 11.20 Unit product cost $55.80 An outside supplier has offered to sell the company all of these parts it needs for $53.40 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $128,000 per year. If the part were purchased from the outside supplier, all of the direct labor costs of the part would be avoided. However, $6.70 of the fixed manufacturing overhead cost being applied to the part would continue even if the part was purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products. Requirement: Suggest the company whether they should make or buy the product? Page 3 of 5 b) Louisville Corporation produces baseball bats for kids that it sells for $32 each. At capacity, the company can produce 50,000 bats a year. The costs of producing and selling 50,000 bats are as follows: Particulars Cost per Bat ($) Total Cost (S) Direct materials 12 600,000 Direct labor 3 150,000 1 50,000 5 250,000 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total costs 2 100,000 4 200,000 27 1.350.000 Requirements: i. Suppose Louisville is currently producing and selling 40,000 bats. At this level of production and sales, its fixed costs are the same as given in the preceding table. Ripkin Corporation wants to place a one-time special order for 10,000 bats at $23.20 each. Louisville will incur no variable selling costs for this special order. Should Louisville accept this one-time special order? ii. Now suppose Louisville is currently producing and selling 50,000 bats. If Louisville accepts Ripkin's offer it will have to sell 10,000 fewer bats to its regular customers. On financial considerations alone, should Louisville accept this one-time special order

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

College Accounting A Practical Approach Chapters 1-15

Authors: Jeffrey Slater

7th Edition

0130954888, 978-0130954886

More Books

Students also viewed these Accounting questions

Question

What made you decide on this subfield of psychology?

Answered: 1 week ago