Question 7: company used the following data at the beginning of the year to calculate predetermined overhead rates: Forming Assembly Total Estimated total machine-hours (MHs) 9,000 1,000 10,000 Estimated total fixed manufacturing overhead cost $ 52,200 $ 2,400 $ 54,600 Estimated variable manufacturing overhead cost per MH $ 2.00 $ 2.10 During the most recent month, the company started and completed two jobs - Job B and Job H. There were no beginning inventories. Data concerning those two jobs follow Forming machine-hours Assembly machine-hours Job B 6.100 400 Job H 2,900 600 Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. The amount of manufacturing overhead applied to Job B is closest to Each year, Madsen Company purchases 8,000 units of a part that it needs for production of its product. The supplier notified Madsen Company that a price increase will take effect shortly, which will bring the price of the part to $25 per part Madsen Company is considering the use of idle facilities to produce the part. The annual production costs to produce the needed 8,000 parts are as follows Direct materials Direct labor Variable indirect production costs Fixed indirect production costs $17.500 30,000 14,000 33.500 The idle facilities could also be rented out at an annual rent of $99,000. All the fixed indirect production costs are avoidable. Evaluate whether the company can produce the part and stop buying 02: Andrea Company manufactures a part for its production cycle. The annual costs per unit for 20,000 units of this part are as follows: $15 Direct materials Direct labor Variable indirect production costs Fixed indirect production costs Total cost 19 Andrea Company has been approached by a supplier who will sell 20,000 units of the same part for $940,000. All the fixed indirect production costs are unavoidable if Andrea Company ceases production of the part Required: A) Assuming there is no alternative use for the facilities, should Andrea Company buy or make the part? B) Assume the facilities can be rented out for $100,000 per year. Should Andrea Company buy the part? If so, how much money will be saved? Q3: Central Industries has three product lines: A, B and C. The following information is available: Sales Variable costs Contribution margin Avoidable fixed costs Unavoidable fixed costs Operating income loss) Product A S100,000 76.000 24,000 9,000 6 000 $9.000 Product B $90,000 48.000 42 mm 18.000 9.000 Product C $44.000 35.000 9.00 3.000 7.700 S13 Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C and does not replace it. What will happen to operating income
