Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem 20-2A (25 POINTS) The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from
Problem 20-2A (25 POINTS) The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called CISCO, is a component of the company's finished product The following information was collected from the accounting records and production data for the year ending December 31, 2017 1. 7,900 units of CISCO were produced in the Machining Department 2. Variable manufacturing costs applicable to the production of each CISCO unit were: direct materials $4.58, direct labor $4.51, indirect labor $0.45, utilities $0.41. 3. Fixed manufacturing costs applicable to the production of CISCO were: Cost Item Costs i Purchas Cost Item TotalCosts Depreciation $2,760 Property taxes 850 320 Insurance 610 1,480 All variable manufacturing and direct fixed costs will be eliminated ir CISCo is purchased. Allocated costs will have to be absorbed by other production departments. 4. The lowest quotation for 7,900 CISCO units from a supplier is $78,853 5. If CISCO units are purchased, freight and inspection costs would be $0.38 per unit, and recelving costs totaling $1,260 por yoar would be incurred by the Machining Department Prepare an incremental analysis for CISCO and indicate whether to make or buy product
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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