XYZ's Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars for P2.00. For this make-or-buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars: Direct materials 1.06 Direct labor 0.08 Unit-related support costs 0.25 Batch-related support costs 0.24 Product-sustaining support costs 0.44 Facility-sustaining support costs 0.50 Total cost per jar 2.57
XYZ's Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars for P2.00. For this make-or-buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars: Direct materials 1.06 Direct labor 0.08 Unit-related support costs 0.25 Batch-related support costs 0.24 Product-sustaining support costs 0.44 Facility-sustaining support costs 0.50 Total cost per jar 2.57
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 7EB: Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has...
Related questions
Question
XYZ's Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars for P2.00. For this make-or-buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars:
Direct materials | 1.06 |
Direct labor | 0.08 |
Unit-related support costs | 0.25 |
Batch-related support costs | 0.24 |
Product-sustaining support costs | 0.44 |
Facility-sustaining support costs | 0.50 |
Total cost per jar | 2.57 |
1. The net advantage (disadvantage) of accepting the supplier’s offer is?
2. The maximum price that XYZ's Preserves should be willing to pay for the decorative jars is?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning