Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Zip Inc, manufactures electric generators. Zip is considering whether to continue to make the motor it uses in its generators or to buy motors from

image text in transcribed
Zip Inc, manufactures electric generators. Zip is considering whether to continue to make the motor it uses in its generators or to buy motors from an outside supplier. At the budgeted level of annual production, Zip's per-unit costs of manufacturing the motors in-house is as follows: Direct materials $95 Direct labor $65 Variable manufacturing overhead $23 Fixed manufacturing overhead $50 Zip will avoid 30% of its fixed manufacturing overhead costs if it buys the motors from an outside supplier. In addition, machine time is a constrained resource and the motors produced in-house require 4 hours of machine time per unit. If Zip buys the motors, this machine time would be treed up to produce more units of another product that requires 8 hours of machine time per unit and has a contribution margin of $90 per unit. At what per-unit purchase price is Zip neither better off nor worse off if it buys the motors from an outside supplier rather than makes the motors in-house! $273 $228 O $198 $243 None of the above

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

Economic Development Finance

Authors: Karl F Seidman

1st Edition

0761927093, 9780761927099

More Books

Students also viewed these Accounting questions

Question

Why should notes to financial statements be reviewed?

Answered: 1 week ago