Part 67 is used in one of R Ltd.'s products. The company's Accounting Department reports the...

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Part 67 is used in one of R Ltd.'s products. The company's Accounting Department reports the following costs of producing the 16,200 units of the part that are needed every year. Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $3.10 $4.10 $6.90 $7.40 $8.50 $5.60 An outside supplier has offered to make the part and sell it to the company for $30.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $22,200 of these allocated general overhead costs would be avoided. Required: You must submit your supporting calculations to receive full marks on this question. a. Prepare a report that shows the financial impact of buying part 67 from the supplier rather than continuing to make it inside the company. b. Which alternative should the company choose? Complete this question by entering your answers in the tabs below. Required A Required B Which alternative should the company choose? The total cost of the "make" alternative is by Therefore, the company should the part Part 67 is used in one of R Ltd.'s products. The company's Accounting Department reports the following costs of producing the 16,200 units of the part that are needed every year. Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $3.10 $4.10 $6.90 $7.40 $8.50 $5.60 An outside supplier has offered to make the part and sell it to the company for $30.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $22,200 of these allocated general overhead costs would be avoided. Required: You must submit your supporting calculations to receive full marks on this question. a. Prepare a report that shows the financial impact of buying part 67 from the supplier rather than continuing to make it inside the company. b. Which alternative should the company choose? Complete this question by entering your answers in the tabs below. Required A Required B Which alternative should the company choose? The total cost of the "make" alternative is by Therefore, the company should the part

Answer rating: 100% (QA)

Required A To make part 67 inhouse Total fixed costs per unit Supervisors salary 74... View the full answer