Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 1 - Special Order: Starcourt, Inc. produces a single product. The cost of producing and selling le unit of this product at the company's
Question 1 - Special Order: Starcourt, Inc. produces a single product. The cost of producing and selling le unit of this product at the company's normal activity level of 20,000 units per year is: a Direct materials $6.252 Direct labore $7.05+ + Variable manufacturing overheade $3.10- + Fixed manufacturing overheade $4.70+ Variable selling and administrative expense$1.90- Fixed selling and administrative expense- $3.20+ The normal selling price is $28.00 per unit. The company's acity is 30,000 units per year. An order has been received from a mail-order house for 4,000 units at a special price of $20.00 per unit. This order would not affect regular sales or the company's total fixed costs. a. Calculate the financial advantage (disadvantage) of accepting the special order. b. Based on your answer to part a, and assuming all else equal, should Starcourt accept this special order? Briefly explain why or why not.' Question 2-make or buy decision: All I'm Saying Corporation makes 45,000 units per year of a part (smart phone screens) it uses in the products it manufactures (smart phones). The unit product cost of this part is computed as follows: Direct materials $10.95. Direct labore 18.00 Variable manufacturing overhead 6.80 Fixed manufacturing overheade 12.00 Unit product coste $47.75 An outside supplier has offered to sell the company all of these parts it needs for $46.00 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 $55,000 per year.' If the part were purchased from the outside supplier, all of the variable costs, including direct labor cost of the part, would be avoided. However, $4.00 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be reallocated to the company's remaining products. What is the financial advantage / (disadvantage) of purchasing the part from the outside supplier rather than making it
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