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Two different questions, please solve, thanks! Beto Company pays $5.30 per unit to buy a part for one of the products it manufactures. With excess
Two different questions, please solve, thanks!
Beto Company pays $5.30 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering making the part. Making the part would cost $5.40 per unit for direct materials and $1.00 per unit for direct labor. The company normally applies overhead at the predetermined rate of 200% of direct labor cost. Incremental overhead to make the part would be 80% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Beto make or buy the part? Answer is not complete. Make Buy (a) Make or Buy Analysis Direct materials $ 5.40 1.00 Direct labor Overhead 0.80 $ 5.30 Cost to buy Cost per unit Cost difference $ 1.20 X (b) Company should: Buy QS 23-20 (Algo) Special offer pricing LO P7 Radar Company sells bikes for $520 each. The company currently sells 4,050 bikes per year and could make as many as 4,440 bikes per year. The bikes cost $285 each to make: $150 in variable costs per bike and $135 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 390 bikes for $490 each. Incremental fixed costs to make this order are $90 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Per Unit Incremental Fixed Costs Total Sales Variable cost Contribution margin Fixed costs Income 0 (b) The company should Accept special offerStep by Step Solution
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