Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

thank you for your help!!!!!!!!!!!! An appliance company currently buys microwave fans for its microwaves from an outside supplier at a cost of $56 per

thank you for your help!!!!!!!!!!!!

image text in transcribedimage text in transcribedimage text in transcribed
An appliance company currently buys microwave fans for its microwaves from an outside supplier at a cost of $56 per fan. It is considering ma king the microwave fans in its manufacturing facility based on the following unit product costs: - The equipment necessary to make the microwave fans was purchased 5 years ago. - General factory overhead would be allocated to this product: however, the company's general factory overhead would not change if they decided to make the microwave fans. - Contribution margin of $1 5 per unit would be lost ifthe company occupies the manufacturing space that is currently being used to manufacture and sell another product. Identify if each product cost is relevant or not. {6 marks} . The equipment necessary to make the microwave fans was purchased 5 years ago. . General factory overhead would be allocated to this product; however, the company's general factory overhead would not change if they decided to make the microwave fans. . Contribution margin of $15 per unit would be lost if the company occupies the manufacturing space that is currently being used to manufacture and sell another product. Identify if each product cost is relevant or not. (6 marks) Amount Relevant cost? Direct materials $29 Direct labour 11 Variable overhead 3 Depreciation of equipment 4 Supervisor's salary 6 General factory overhead 2 Unit product cost $55 What is the total incremental unit cost to make a microwave fan in the company's manufacturing facility? (1 mark) What is the total opportunity cost per unit if the company makes microwave fans in its manufacturing facility? (1 mark)What is the total incremental unit cost to make a microwave fan in the company's manufacturing facility? (1 mark] | a: What is the total opportunity cost per unit if the company makes microwave fans in its manufacturing facility? [1 mark) la: Should the company continue to buy microwave fans from an outside supplier, or should it start to make them in its manufacturing facility? (1 mark) 0 The company should continue to buy its microwave fans from the outside supplier. O The company should manufacture its own microwave fans

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_2

Step: 3

blur-text-image_3

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

Accounting What The Numbers Mean

Authors: David Marshall, Wayne McManus, Daniel Viele

10th Edition

77729870, 9780077729875

More Books

Students also viewed these Accounting questions

Question

Why should goals be specific and measurable?

Answered: 1 week ago