Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 3 (30 marks) A- AAA Company manufactures 38,000 units of a specific part each year for use on its production line. At this level

image text in transcribed
image text in transcribed
Question 3 (30 marks) A- AAA Company manufactures 38,000 units of a specific part each year for use on its production line. At this level of activity, the cost per unit for the part is: Direct materials $ 3.10 Direct laber 10.00 Vanaematurg overhead 290 Fored manufacturing overhead 800 Tocal.com 333.00 AAA Company received an offer from an outside supplier to sell 38,000 units of this part each year to AAA Company for $21 per part. If AAA Company accepts this offer, the facilities now being used to manufacture this part could be rented to another company at an annual rental of $88,000. However, AAA Company has determined that two-thirds of the fixed manufacturing overhead being applied to this part would continue even if the part were purchased from the outside supplier Required: Should AAA Company accept the supplier's offer? Support your answer by calculating the financial advantage (disadvantage) of buying 38,000 parts from the outside supplier, and explain the reason behind your answer and calculations (10 Marks) B- ABC Corporation has estimated the following information for first quarter of 2020 for one of its products: My Mind Units to be produced 122.000 4.00 12.000 Desired ending inventory of finished goods 10,000 36,00 32,000 The ending inventory at December 2019 was 28,000 units. Reyuired: Prepare the Production Budget and the Sales Budget for the first quarter of 2020, assuming selling price per unit is $20. (10 marks) - At an activity level of 9.000 machine-hours in a month, XYZ Corporation's total variable production cost is $796,500 and its total fixed production cost is $235,290. What would be the total production cost per machine-hour, both fixed and variable, at an activity level of 9,300 machine-hours in a month? (3 Marks) D- Management of Farah Corporation has asked your help as an intern in preparing some key reports for April. Direct labor cost was $25,000, Total manufacturing costs during April were $176,000. Direct labor cost was 20% of prime cost. Regwired: Calculate direct material cost and the manufacturing overhead (4 Marks) cost. E- The following information have been taken from a manufacturing company for the year 2020: Sales revenues $98,000 inventory of raw materials January 1, 2020 5,000 inventory of raw materials December 31, 2020 6,000 Purchases of raw materials during 2020 12,000 inventory of work in progress January 1, 2020 8,000 inventory of work in progress December 31, 2020 7,000 inventory of finished goods January 1 2020 16,000 inventory of finished goods December 31, 2020 4,000 Sales returns 1,500 cost of goods produced 56,000 Trade discount allowed 2,500 Cash discount allowed 2,000 Salaries Expense 10,000 Required: Calculate cost of goods sold and gross profit for the year ended December 31, 2020

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

Anti Fraud Risk And Control Workbook

Authors: Peter Goldmann, Hilton Kaufman

1st Edition

0470496533, 978-0470496534

More Books

Students also viewed these Accounting questions