Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 15,200 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 $ 2.10 $ 3.10 $ 5.90 $ 6.40 $ 7.50 $ 4.60 An outside supplier has offered to make the part and sell it to the company for $26.00 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 $21,200 of these allocated general overhead costs would be avoided. Required: a. Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make It Inside the company. b. Which alternative should the company choose? Required A Required B Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the company. Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Outside purchase price Total cost Make Buy The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below. Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $ 740,700 $ 384,800 $ 252,000 $ 215,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further Investigation has revealed that $178,000 of the fixed manufacturing expenses and $154,300 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped? Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 15,200 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 $ 2.10 $ 3.10 $ 5.90 $ 6.40 $ 7.50 $ 4.60 An outside supplier has offered to make the part and sell it to the company for $26.00 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 $21,200 of these allocated general overhead costs would be avoided. Required: a. Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make It Inside the company. b. Which alternative should the company choose? Required A Required B Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside the company. Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Outside purchase price Total cost Make Buy The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below. Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $ 740,700 $ 384,800 $ 252,000 $ 215,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further Investigation has revealed that $178,000 of the fixed manufacturing expenses and $154,300 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped?
Expert Answer:
Related Book For
Auditing The Art and Science of Assurance Engagements
ISBN: 978-0133405507
13th Canadian edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Joanne C. Jones
Posted Date:
Students also viewed these accounting questions
-
We consider the following grid-graph, the graph in non-directed and weighted (with weights ranging from 1 to 4, represented by the thickness of the edges). The 12 Vertices are numbered from bottom to...
-
Design for Quality (D4Q) is a consulting firm that specializes in the design and implementation of quality management programs for service companies and organizations. It has had success designing...
-
Calculate the KP for this reaction at 298 K if the Keq = 1.76 103. 3O2 (g) + 2O3(g)
-
1: Draw a US Coke bottler s demand for corn syrup. ( Hint: You are free to assume any data necessary to draw the demand. ) 2: Use your figure to explain how the following changes would affect the...
-
A cylindrical cavity of diameter \(D\) and depth \(L\) is machined in a metal block, and conditions are such that the base and side surfaces of the cavity are maintained at \(T_{1}=950 \mathrm{~K}\)...
-
Suppose you own 2,000 common shares of Laurence Incorporated. The EPS is $10.00, the DPS is $3.00, and the stock sells for $80 per share. Laurence announces a 2-for-1 split. Immediately after the...
-
A magnetic field points due west. A particle with a charge of +5.0 C travels 96 km/s in the direction 20 north of west. It experiences a magnetic force of 0.133 N. What is the magnitude of the...
-
Reynolds Construction's value of operations is $750 million based on the corporate valuation model. Its balance sheet shows $50 million of short-term investments that are unrelated to operations,...
-
Would it be wrong for economists to propose only Pareto optimal policies?
-
What is the key difference between a monopolist and a perfect competitor?
-
A monopolist is selling fish. But if the fish dont sell, they rot. What will be the likely elasticity at the point on the demand curve at which the monopolist sets the price? (Difficult)
-
Even though a policys stated goals may be laudable, its actual outcome can often cause serious problems. a. How much does it matter to an economist how closely a policys goals match its outcome? b....
-
What is the basis for the opinions of public choice economists about governments ability to correct market failures?
-
What is the best way to deal with "Free Riders?" Comment on at least two areas where Free Riders are a problem.
-
Is it a breach of fiduciary duty for a director of a real estate investment trust (REIT) negotiating a joint venture on behalf of the REIT with another director for the development of a portfolio of...
-
Deliberate the need for transformational or collaborative leadership in the next 5 years as the health care environment transforms as a result of industry reform.
-
If you were the director of a major department in a health care company, how important would each of the following activities be to you? Answer yes or no to indicate whether you would strive to...
-
A number of testing instruments have been developed to measure emotional intelligence, although the content and approach of each test varies. See the About.com Psychology Website at...
Study smarter with the SolutionInn App