Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

REQUIRED Based upon relevant cost differences, should ABC company make or buy the component. Show the calculation Management of Bottleneck company is assessing if the

image text in transcribedimage text in transcribed

REQUIRED Based upon relevant cost differences, should ABC company make or buy the component. Show the calculation Management of Bottleneck company is assessing if the company should continue manufacturing a part that the company needs when manufacturing a car. Based on its financial report , it seems it costs the company $45 per unit to make the component. The cost is broken in the following manner $ 20,000 2500 $28.00 $18,000 Raw Materials Direct Labor hours Hourly rate paid to workers Variable Manufacturing Overhead Fixed Manufacturing Overhead Rent (factory] Utilities [Factory] Indirect materials Indirect labour Units manufactured $ 18,500 $ 2,800 $ 6,500 $ 12,300 2000 An outside company Calgary Ltd made an offer to provide the part at $50. Some of the managers felt that this may reduce cost and thus that component can be be bought from outside and discontinue production of the component. If the company purchases from outside , it will save $5.00 per in fixed overhead per unit and $2.00 on variable cost per unit and in addition the company can lease part of the facilities for $4200

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

Business Process Modeling Simulation And Design

Authors: Manuel Laguna, Johan Marklund

3rd Edition

1138061735, 978-1138061736

More Books

Students also viewed these Accounting questions

Question

What are your current research studies?

Answered: 1 week ago

Question

=+Why were they effective? How could you continue the campaign?

Answered: 1 week ago

Question

=+Who's your primary audience?

Answered: 1 week ago

Question

=+What do they need to hear?

Answered: 1 week ago