Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

XYZ Company has been manufacturing its own widgets that are used in producing its final product. The cost of manufacturing 10,000 widgets is summarized below.

image text in transcribed

XYZ Company has been manufacturing its own widgets that are used in producing its final product. The cost of manufacturing 10,000 widgets is summarized below. Direct materials $25,000 Direct labour 20,000 Variable factory overhead 9,000 Fixed factory overhead 16,000 Total manufacturing costs $70,000 A supplier offers to produce the widgets that XYZ needs for $5.5 plus freight costs of $0.50 per widget. If the company decides to buy from the supplier, 70% of the fixed factory overhead which represents depreciation and insurance costs will continue. 30% will be avoided. a.) Decide if the company should continue to make the widget or purchase it from the outside supplier. (5 MARKS) b.) Suppose that if the company chooses to buy the widget, the space used to manufacture the widgets before can be rented out to a tenant for $4,500. Under this scenario, decide if the company should continue to make the widget or purchase it from the outside supplier

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

Modern Accounting And Auditing Forms

Authors: Wendell

1st Edition

0882621769, 978-0882621760

More Books

Students also viewed these Accounting questions

Question

How can you improve the performance of a BN?

Answered: 1 week ago

Question

u = 5 j , v = 6 i Find the angle between the vectors.

Answered: 1 week ago