Tiny Toy Company needs 40,000 miniature engines to complete its toy fire trucks If Tiny Toy Company
Question:
Tiny Toy Company needs 40,000 miniature engines to complete its toy fire trucks If Tiny Toy Company buys rather than makes the part, some of the facilities still can not be used in another manufacturing activity. Twenty-five percent of the fixed man ufacturing overhead costs are indirect and will still be incurred regardless of which decision is made. The following costs of making and buying the part are:
Cost to make the part:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $\$ 5.00$
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.00 Variable manufacturing overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.00 Fixed manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.00
$\$ 30.00$
Cost to buy the part from another company . . . . . . . . . . . . . . . . . . . . . . . $\underline{\underline{228.80}}$
Identify the differential costs of making the part as a basis for deciding whether to make or buy it.
Step by Step Answer:
Survey Of Accounting
ISBN: 9780538846172
1st Edition
Authors: James D. Stice, W. Steve Albrecht, Earl Kay Stice, K. Fred Skousen