Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly
Question:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . $ 25
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Variable overhead . . . . . . . . . . . . . . . . . . . . . 16
Fixed overhead . . . . . . . . . . . . . . . . . . . . . . . 47
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $141
Trailblazers has offered to sell the assembly to Mobility for $110 each. The total order would amount to 2,000 rear wheel assemblies per year, which Mobility’s management will buy instead of make if Mobility can save at least $10,000 per year. Accepting Trailblazers’s offer would eliminate annual fixed overhead of $40,000.
Required
Should Mobility make rear wheel assemblies or buy them from Trailblazers? Prepare a schedule that shows the differential costs per rear wheel assembly.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Question Posted: