Use the following information to answer the next TWO (2) questions. Fillip Corporation makes 4,000 units...

Transcribed Image Text:

Use the following information to answer the next TWO (2) questions. Fillip Corporation makes 4,000 units of component UFO each year. This component is used in one of the company's final products. The company's Accounting Department reports the following costs of producing the component UFO at this level of activity: Direct materials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Total $ $ Per Unit 6.20 4.40 6.80 2.50 8.60 7.50 36.00 $ Total (4,000 units) 24,800 17,600 27,200 10,000 34,400 30,000 144,000 $ An outside supplier has offered to make and sell the component UFO to the company for $21.60 each. If this offer were accepted, the supervisor will be laid-off. The special equipment used to make the component was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire factory. If the outside supplier's offer were accepted, only 10% of these general overhead costs would be avoided. 11. What is the DIFFERENCE in cost of making versus buying the component UFO and what should Fillip Corporation do?? A) $57,600, in favor of buying. B) $13,800, in favor of making. C) $3,800, in favor of buying. D) $30,600 in favor of buying. E) $3,800 in favor of making. 12. If the outside supplier's offer were accepted, the space used to produce component UFO would be used to make more of one of the company's other products, generating an additional segment margin of $13,000 per year. What is the DIFFERENCE in cost of making versus buying the component UFO and what should Fillip Corporation do? A) $70,600, in favor of buying. B) $16,800, in favor of making. C) $ 9,200, in favor of buying. D) $43,600, in favor of buying. E) $9,200, in favor of making. Use the following information to answer the next TWO (2) questions. Fillip Corporation makes 4,000 units of component UFO each year. This component is used in one of the company's final products. The company's Accounting Department reports the following costs of producing the component UFO at this level of activity: Direct materials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Total $ $ Per Unit 6.20 4.40 6.80 2.50 8.60 7.50 36.00 $ Total (4,000 units) 24,800 17,600 27,200 10,000 34,400 30,000 144,000 $ An outside supplier has offered to make and sell the component UFO to the company for $21.60 each. If this offer were accepted, the supervisor will be laid-off. The special equipment used to make the component was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire factory. If the outside supplier's offer were accepted, only 10% of these general overhead costs would be avoided. 11. What is the DIFFERENCE in cost of making versus buying the component UFO and what should Fillip Corporation do?? A) $57,600, in favor of buying. B) $13,800, in favor of making. C) $3,800, in favor of buying. D) $30,600 in favor of buying. E) $3,800 in favor of making. 12. If the outside supplier's offer were accepted, the space used to produce component UFO would be used to make more of one of the company's other products, generating an additional segment margin of $13,000 per year. What is the DIFFERENCE in cost of making versus buying the component UFO and what should Fillip Corporation do? A) $70,600, in favor of buying. B) $16,800, in favor of making. C) $ 9,200, in favor of buying. D) $43,600, in favor of buying. E) $9,200, in favor of making.

Answer rating: 100% (QA)

ANSWER Question 11 To find the difference in cost of making versus buying the component UFO we need ... View the full answer