Waterway Company manufactures widgets. Carla Vista Company has approached Waterway with a proposal to sell the company widgets at a price of $60100 for 100,000 units. Waterway is currently making these components in its own factory. The following costs are associated with this part of the process when 100,000 units are produced: Direct material $22700 Direct labour 21600 Manufacturing overhead 30500 Total $74800 The manufacturing overhead consists of $12600 of costs that will be eliminated if the components are no longer produced by Waterway. From Waterway's point of view, how much is the incremental cost or savings if the widgets are bought instead of made? O $14700 incremental cost O $14700 incremental savings O $3200 incremental savings O $3200 incremental cost
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- Bramble Company manufactures widgets. Blossom Company has approached Bramble with a proposal to sell the company widgets at a price of $60500 for 100,000 units. Bramble is currently making these components in its own factory. The following costs are associated with this part of the process when 100,000 units are produced: Direct material $22700 Direct labour 23000 Manufacturing overhead 29000 Total $74700 The manufacturing overhead consists of $12300 of costs that will be eliminated if the components are no longer produced by Bramble. From Bramble’s point of view, how much is the incremental cost or savings if the widgets are bought instead of made? $14200 incremental savings $2500 incremental savings $2500 incremental cost $14200 incremental costHowell Corporaon produces an execuve jet for which it currently manufactures a fuel valve; the cost ofthe valve is indicated below:Cost per UnitVariable costsDirect material $900Direct labor 600Variable overhead 300Fixed costsDepreciaon of equipment 500Depreciaon of building 200Supervisory salaries 300The company has an offer from Duvall Valves to produce the part for $2,000 per unit and supply 1,000 valves(the number needed in the coming year). If the company accepts this offer and shuts down producon ofvalves, producon workers and supervisors will be reassigned to other areas. The equipment cannot be usedelsewhere in the company, and it has no market value. However, the space occupied by the producon of thevalve can be used by another producon group that is currently leasing space for $55,000 per year.What is the incremental savings of buying the valves? (The answer should be stated in a per‐unit format and is a positive number)Christian Banera Company currently manufacturing the 20,000 unit parts it uses in its product production. The cost per unit of this part is computed as follows: Direct materials Direct labor $24.70 16.50 2.30 Variable manufacturing overhead Fixed manufacturing overhead Unit product cost 13.40 $56.90 An outside supplier has offered to sell the company all of these parts it needs for $51.80 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $44,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $5.10 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.…
- Snow Ride manufactures snowboards. Its cost of making 1,900 bindings is as follows: Direct materials $ 17,590 Direct laabor 3,200 Variable overhead 2,080 Fixed overhead 6,300 Total manufacturing cost for 1,900 bindings $ 29,170 Suppose Livingston will sell bindings to Snow Ride for $13 each. Snow Ride would pay $3 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.50 per binding. Requirments: 1. Snow Ride's accountants predict that purchasing the bindings from livingston will enable the company to avoid $2,100 of fixed overhead. Prepare an analysis to show whether Snow Ride should make or buy the bindings. 2. The facilities freed by purchasing bindings from…Specter Company makes 20,000 units per year of a part it uses in the products it manufactures.The unit product cost of this part is computed as follows:Direct materials $25.10Direct labour 18.20Variable manufacturing overhead 2.40Fixed manufacturing overhead 13.40Unit product cost $56.70An outside supplier has offered to sell the company all these parts it needs for $56.00 a unit. Ifthe company accepts this offer, the facilities now being used to make the part could be used tomake more units of a product that is in high demand. The additional contribution margin on thisother product would be $50,000 per year.If the part were purchased from the outside supplier, all the direct labour cost of the part wouldbe avoided. However, $5.10 of the fixed manufacturing overhead cost being applied to the partwould continue even if the part were purchased from the outside supplier. This fixedmanufacturing overhead cost would be applied to the company's remaining products.Required:Part a:Calculate…Mohave Corp. is considering outsourcing production of ht eumbrella tote bag included with some of its products. The company has received a bid from a supplier in Vietnam to produce 9600 units per year for 7.00 each. Mohave has the following information about the cost of producing tote bags:Directs materials 3.00Direct Labor 2.00Variable manufacturing overhead 1.00Fixed manufacturing overhead 2.50Total cost per unit 8.50Mohave has deteremined that all variable costs could be eliminated by outsourcing the tote bads, while 75 percent of the fixed overhead cost is unavoidable. At this time, Mohave has no specifif use in mind for the space currently dedicated to producing the tote bags.1.) Compute the difference in cost between making and buying the umbrella tote bag. 2.) Based strictly on the incremental analysis should mohave buy the tote bags or contiunue to make them? 3-a.) Suppose that the space mohave currently uses to make the bags could be utilized by a new product line that would…
- Ring Company makes telephones. Currently, Ring makes all components of the telephones in-house. An outside company has offered to supply one component, part number X76, for $12 each. Ring uses 22,000 of these components per year. Costs of X76 are as follows: Direct materials $3.00 Direct labor $1.50 Variable overhead $2.75 Fixed overhead $5.00 Refer to Figure 13-7. Assume that all of the fixed overhead is allocated and cannot be avoided. Should Ring purchase the part from the outside supplier? Yes, income will increase by $104,500. No, income will decrease by $104,500. Yes, income will increase by $78,500. Yes, income will increase by $95,500. Yes, income will increase by $137,500.Snowy Mountain manufactures snowboards. Its cost of making 19,000 bindings is as follows Direct material $22000 Direct Labor $81000 Variable Manufacturing overhead $44000 Fixed Manufacturing overhead $81000 Total manufacturing costs $228000 Cost/per ($228000/19000) $12.00 The data from the table are as follows: Suppose an outside supplier will sell bindings to Snowy Mountain for $15 each. Snowy Mountain would pay $2.00 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost $0.50 of per binding. Requirements 1. Snowy Mountain’s accountants predict that purchasing the bindings from an outside supplier will enable the company to avoid $1,900 of fixed overhead. Prepare an analysis to show whether the company should make or buy the bindings. 2. The facilities freed by purchasing bindings from the outside supplier can be used to manufacture another product that will contribute $3,100 to profit. Total fixed costs will be the same…Fancy Lighting Company makes 4,000 units per year of a part it uses in the luxury lighting products it manufactures. The unit product cost of this part is computed as follows: Direct materials $ 11.90 Direct labor 19.50 Variable manufacturing overhead 1.70 Fixed manufacturing overhead 9.60 Unit product cost $ 42.70 An outside supplier has offered to sell the company all of these parts it needs for $41.00 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a lighting product that is in high demand. The additional contribution margin on this other lighting product would be $32,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $ 6.50 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to…
- Ahrends Corporation makes 46,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 14.30 23.90 3.00 28.30 $69.50 An outside supplier has offered to sell the company all of these parts it needs for $55.80 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $368,000 per year If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $24.90 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products What…MI Enterprise manufactures 30,000 units of mobile phone memory cards which is coded as MI2210. This is used in their production line. At the current level of activity, the cost per unit for MI2210 is: Direct Materials $4; Direct Labor $ 7.5; Variable Manufacturing Overhead; $ 2.5Fixed Manufacturing Overhead $ 10; Total cost per part $24. An outside supplier has offered to sell 30,000 units of this part to MI Enterprise for $20 per part. MI Enterprise has determined that two-thirds of fixed manufacturing overhead being applied to part MI2210 would continue even if part MI2210 were purchased from the outside supplier. Should the outside supplier’s order be accepted? Justify your answer.Hooray Company has been manufacturing 12,000 units of Part A which is used to manufacture one of its products. At this level of production, the cost per unit is as follows: 20. Direct materials P 4.80 Direct labor 19.20 Variable overhead 9.60 Fixed overhead 14.40 Hooray Company has an opportunity to purchase the parts from Supplier Silver Company at P45.60 per unit. It determined that it could use the facilities presently used to manufacture Part A and generate an operating profit of P9,600. It also determined that 40% of the fixed overhead applied will continue even if Part A is purchased from Supplier Silver If the Company decides to purchase from an outside supplier, what will be the gain or loss? *write gain as positive and loss as negative