One component of communication equipment produced by Briggs Audio Systems is currently being purchased for P225. Management is studying the possibility of manufacturing that component. Annual usage of the part is 5,000 units. Fixed costs (all of which remains unchanged whether the part is made or purchased) are at P140,000 or P28 per unit. If to be produced, Variable costs are P95 per unit for materials; P55 per unit for labor; and P60 per unit for variable manufacturing overhead. Required: Which option would be advantageous and by how much? Make is advantageous by P75,000 Buy is advantageous by P75,000 Make is advantageous by P65,000 Buy is advantageous by P65,000
One component of communication equipment produced by Briggs Audio Systems is currently being purchased for P225. Management is studying the possibility of manufacturing that component. Annual usage of the part is 5,000 units. Fixed costs (all of which remains unchanged whether the part is made or purchased) are at P140,000 or P28 per unit. If to be produced, Variable costs are P95 per unit for materials; P55 per unit for labor; and P60 per unit for variable manufacturing overhead. Required: Which option would be advantageous and by how much? Make is advantageous by P75,000 Buy is advantageous by P75,000 Make is advantageous by P65,000 Buy is advantageous by P65,000
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...
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One component of communication equipment produced by Briggs Audio Systems is currently being purchased for P225. Management is studying the possibility of manufacturing that component. Annual usage of the part is 5,000 units. Fixed costs (all of which remains unchanged whether the part is made or purchased) are at P140,000 or P28 per unit. If to be produced, Variable costs are P95 per unit for materials; P55 per unit for labor; and P60 per unit for variable manufacturing
Required: Which option would be advantageous and by how much?
- Make is advantageous by P75,000
- Buy is advantageous by P75,000
- Make is advantageous by P65,000
- Buy is advantageous by P65,000
Group of answer choices
1
2
3
4
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