WT. Ginsburg Engine Company manufactures part ACT31107 used in several of its engine models. Monthly production costs for 1,010 units are as follows: Direct materials Direct labor $46,000 11,500 Variable overhead costs 32,500 Faed overhead oosts 23,000 Total costs $113,000 hestimated that 10% of the foxed overhead costs assigned to ACT31107 will no longer be incurred if the company purchases ACT31107 from the outside supplier. W.T. Ginsburg Engine Company has the option of purchasing the part from an outside supplier at $96.75 per unit. W.T. Ginsburg Engine Company purchases 1,010 ACT31107 parts from the outside supplier per month, then its monthly operating income will (Round any intermediary calculations and your final answer to the nearest cent,) OA Increase by $21,518 OB decrease by $5,418 OC norease by $5,418 OD. decrease by $21,518

WT. Ginsburg Engine Company manufactures part ACT31107 used in several of its engine models. Monthly production costs for 1,010 units are as follows: Direct materials Direct labor $46,000 11,500 Variable overhead costs 32,500 Faed overhead oosts 23,000 Total costs $113,000 hestimated that 10% of the foxed overhead costs assigned to ACT31107 will no longer be incurred if the company purchases ACT31107 from the outside supplier. W.T. Ginsburg Engine Company has the option of purchasing the part from an outside supplier at $96.75 per unit. W.T. Ginsburg Engine Company purchases 1,010 ACT31107 parts from the outside supplier per month, then its monthly operating income will (Round any intermediary calculations and your final answer to the nearest cent,) OA Increase by $21,518 OB decrease by $5,418 OC norease by $5,418 OD. decrease by $21,518

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 4EA: Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special...

See similar textbooks

Similar questions

Genent's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows:                                         Direct materials                                  $46,000                                         Direct labor 11,500                                         Variable overhead costs 34,500                                         Fixed overhead costs                           23,000                                                 Total costs $115,000 It is estimated that 8% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Genent's Engine Company has the option of purchasing the part from an outside supplier at $97.75 per unit. The maximum price per unit (TE456 part) that Genent's Engine Company should be willing to pay the…
Shine Engine Company manufacturers Part A which is used in several of its engine models. Monthly production costs for 1,000 units are as follows: Direct materials                                                           sh. 40,000 Direct labour                                                                     10,000 Variable overhead costs                                                  30,000 Fixed overhead costs                                                      20,000 Total costs                                                                          100,000                                                                                                                                                                               It is estimated that 10% of the fixed overhead costs assigned to Part A will no longer be incurred if the company purchases Part A from the outside supplier. The company has the option of purchasing the part from an outside supplier at sh. 85 per…
Shine Engine Company manufacturers Part A which is used in several of its engine models. Monthly production costs for 1,000 units are as follows: Direct materials                                                           sh. 40,000 Direct labour                                                                     10,000 Variable overhead costs                                                  30,000 Fixed overhead costs                                                      20,000 Total costs                                                                          100,000                                                                                                                                                                               It is estimated that 10% of the fixed overhead costs assigned to Part A will no longer be incurred if the company purchases Part A from the outside supplier. The company has the option of purchasing the part from an outside supplier at sh. 85 per…
Fair Engineering Company manufactures part QE767 used in several of its engine models. Monthly production costs for 10,000 units are as follows: Direct materials $80,000 Direct labor 20,000 Variable support costs 50,000 Fixed support costs 40,000 Total Costs $190,000 It is estimated that 20% of the fixed support costs assigned to part QE767 will no longer be incurred if the company purchases the part from the outside supplier. Fair Engineering Company has the option of purchasing the part from an outside supplier at $16 per unit. If Fair Engineering Company purchases 10,000 QE767 parts from the outside supplier per month, then its monthly operating income will:
ABC Company manufactures Part AA for use in its production cycle. The costs per unit for 25,000 units for the part are as follows: Direct materials P 7.50 Direct labor 37.50 Variable overhead 15.00 Fixed overhead 20.00 XYZ Company has offered to sell ABC Company the 25,000 units needed by the latter for P75 per unit. If ABC Company accepts the offer, the released facilities could be rented out in the amount of P112,500. In addition, P12.50 per unit of fixed overhead applied to part AA would be eliminated or avoided. What alternative is more desirable and by what amount it is more desirable? Buy – P 50,000 Make – P50,000 Buy – P262,500 Make – P 262,500 Group of answer choices 1 2 3 4
Dexter Company manufactures part ZX used in several of its engine models. Monthly production costs for 10,000 units are as follows: Direct materials $80,000 Direct labor 20,000 Variable support costs 50,000 Fixed support costs 40,000 Total costs $190,000 It is estimated that 30% of the fixed support costs assigned to part ZX will no longer be incurred if the company purchases the part from the outside supplier. Dexter Company has the option of purchasing the part from an outside supplier at $16 per unit. If Dexter Company purchases 10,000 ZX parts from the outside supplier per month, then its monthly operating income will:
ABC Company manufactures Part AA for use in its production cycle. The costs per unit for 25,000 units for the part are as follows: Direct materials P 7.50 Direct labor 37.50 Variable overhead 15.00 Fixed overhead 20.00 XYZ Company has offered to sell ABC Company the 25,000 units needed by the latter for P75 per unit. If ABC Company accepts the offer, the released facilities could be rented out in the amount of P112,500. In addition, P12.50 per unit of fixed overhead applied to part AA would be eliminated or avoided. What alternative is more desirable and by what amount it is more desirable? 1. Buy - P 50,000 2. Make - P50,000 3. Buy - P262,500 4. Make - P 262,500 O 1 O 2 O 3 O 4
Beta makes a component used in its engine. Monthly production costs for 1,000 component units are as follows: Direct materials $46,000 Direct labor 11,500 Variable overhead costs 34,500 Fixed overhead costs 23,000 Total costs $115,000 It is estimated that 8% of the fixed overhead costs will no longer be incurred if the company purchases the component from an outside supplier. Beta has the option of purchasing the component from an outside supplier at $97.75 per unit. 22) If Beta accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer be incurred) total 23) If Beta purchases 1,000 units from the outside supplier per month, then what would be the change in operating income?
Waterway Industries incurs the following costs to produce 10600 units of a subcomponent: Direct materials $8904Direct labor 11978Variable overhead 13356Fixed overhead 16200 An outside supplier has offered to sell Waterway the subcomponent for $2.85 a unit. If Waterway accepts the offer, by how much will net income increase (decrease)? a. $(3074)b. $(9328)c. $4028d. $20228
Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent:Direct materials $8400 Direct Labor $11,250 Variable overhead $12,600 Fixed overhead $16,200 An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit. If Clemente accepts the offer, by how much will net income increase (decrease)? $3,750 $19,950 $(8,850) $(2,850)
McGraw Company uses 7.750 units of Part X each year as a component in the assembly of one of its products. The company is presently producing Part X internally at a total cost of $135,750, computed as follows Direct materials: Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost $ 23,250 41,000 An outside supplier has offered to provide Part X at a price of $19.10 per unit. If McGraw Company stops producing the part internally. one-third of the fixed manufacturing overhead would be eliminated. Assume that direct labor is a variable cost Outside purchase Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost 15,500 56,000 $ 135,750 Required: Prepare an analysis showing the annual financial advantage or disadvantage of accepting the outside supplier's offer Make Buy
A manufacturer has been offered a contract to manufacture a certain product that will utilize the waste materials from his present product. The new product will use 0.3kg of waste materials per unit which is presently sold by the company for P2.00 per kg. Other materials to be used will cost P0.80 per unit. Direct labor per unit will cost P2.30. The present overhead costs of the company amount to P380,000 plus 40% of the total for direct materials and direct labor costs per year. The buyer will pay the manufacturer per unit an amount equal to the increment costs plus P1.20 profit. Determine the selling price of the manufacturer per unit.