The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $ 769,600 $399,900 $261,800 $223,400 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $185,000 of the fixed manufacturing expenses and $160,300 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped? Net operating income (loss) would if product B90D were dropped. Therefore, the product dropped Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $21, computed as follows: -voo Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost u $21 An outside supplier has offered to provide the annual requirement of 5,500 of the parts for only $13 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier Ewould be: Multiple Choice O $6 per unit on average 0 ($1) per unit on average 0 ($8) per unit on average 0 O $1 per unit on average Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the following costs of producing the 7,400 units of the part that are needed every year. Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $ 8.20 $ 4.60 $ 9.10 $ 3.50 $ 3.00 $ 1.60 An outside supplier has offered to make the part and sell it to the company for $29.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $2,400 of these allocated general overhead costs would be avoided. In addition, the space used to produce part Q89 could be used to make more of one of the company's other products, generating an additional segment margin of $15,900 per year for that product. Required: a. Prepare a report that shows the financial impact of buying part Q89 from the supplier rather than continuing to make it inside the company. b. Which alternative should the company choose? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a report that shows the financial impact of buying part 289 from the supplier rather than continuing to make it inside the company. Buy $ Make 60,6801 34,040 67,340 25,900 Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Outside purchase price Opportunity cost Total cost 2,400 $ 214,600 15,900 206,260 $ $ 214,600 Required A Required B Which alternative should the company choose? The total cost of the "make" alternative is higher by $ 8,340 Therefore, the company should make the part. Gallerani Corporation has received a request for a special order of 4,100 units of product A90 for $26.70 each. Product A90's unit product cost is $26.00, determined as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 2.45 7.75 6.85 8.95 $26.00 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $3.10 per unit and that would require an investment of $20,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multiple Choice O $(29,840) O $(47,970) O $2,870 O $6,855 The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $ 769,600 $399,900 $261,800 $223,400 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $185,000 of the fixed manufacturing expenses and $160,300 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped? Net operating income (loss) would if product B90D were dropped. Therefore, the product dropped Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $21, computed as follows: -voo Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost u $21 An outside supplier has offered to provide the annual requirement of 5,500 of the parts for only $13 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier Ewould be: Multiple Choice O $6 per unit on average 0 ($1) per unit on average 0 ($8) per unit on average 0 O $1 per unit on average Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the following costs of producing the 7,400 units of the part that are needed every year. Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $ 8.20 $ 4.60 $ 9.10 $ 3.50 $ 3.00 $ 1.60 An outside supplier has offered to make the part and sell it to the company for $29.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $2,400 of these allocated general overhead costs would be avoided. In addition, the space used to produce part Q89 could be used to make more of one of the company's other products, generating an additional segment margin of $15,900 per year for that product. Required: a. Prepare a report that shows the financial impact of buying part Q89 from the supplier rather than continuing to make it inside the company. b. Which alternative should the company choose? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a report that shows the financial impact of buying part 289 from the supplier rather than continuing to make it inside the company. Buy $ Make 60,6801 34,040 67,340 25,900 Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Outside purchase price Opportunity cost Total cost 2,400 $ 214,600 15,900 206,260 $ $ 214,600 Required A Required B Which alternative should the company choose? The total cost of the "make" alternative is higher by $ 8,340 Therefore, the company should make the part. Gallerani Corporation has received a request for a special order of 4,100 units of product A90 for $26.70 each. Product A90's unit product cost is $26.00, determined as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 2.45 7.75 6.85 8.95 $26.00 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $3.10 per unit and that would require an investment of $20,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multiple Choice O $(29,840) O $(47,970) O $2,870 O $6,855