2002Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs ofproducing the 14,900 units of the part that are needed every year.Direct materialsDirect laborVariable overheadSupervisor's salaryDepreciation of special equipmentAllocated general overheadPer Unit$ 1.80$ 2.80$ 5.60$ 6.10$ 7.20$ 4.30An outside supplier has offered to make the part and sell it to the company for $22.00 each. If this offer is accepted, the supervisor'ssalary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part waspurchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entirecompany. If the outside supplier's offer were accepted, only $20,900 of these allocated general overhead costs would be avoided.Required:a.Prepare a report that shows the financial impact of buying part U67 from the supplier rather than continuing to make it inside thecompany.b. Which alternative should the company choose?

a. Financial Impact AnalysisThis report analyzes the financial impact of buying part U67 from a…

Answered: 20 02 Part U67 is used in one of Broce…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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The following product costs are available for Stellis Company on the production of erasers: direct materials, $22,000; direct labor, $35,000; manufacturing overhead, $17,500; selling expenses, $17,600; and administrative expenses; $13,400. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 13,750 equivalent units are produced, what is the equivalent material cost per unit? If 17,500 equivalent units are produced, what is the equivalent conversion cost per unit?
The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
York Company Is a machine shop that estimated overhead will be $50,000, consisting of 5,000 hours of direct labor. The cost to make job 0325 is $70 in aluminum and two hours of labor at $20 per hour. During the month. York incurs $50 in indirect material cost. $150 in administrative labor, $300 in utilities, and $250 in depreciation expense. What is the predetermined overhead rate if direct labor hours are considered the cost driver? What is the cost of Job 0325? What is the overhead incurred during the month?
Steeler Towel Company estimates its overhead to be $250,000. It expects to have 100,000 direct labor hours costing $2,500,000 in labor and utilizing 12,500 machine hours. Calculate the predetermined overhead rate using: A. Direct labor hours B. Direct labor dollars C. Machine hours
Pocono Cement Forms expects $900,000 in overhead during the next year. It does not know whether it should apply overhead on the basis of its anticipated direct labor hours of 60,000 or its expected machine hours of 30,000. Determine the product cost under each predetermined allocation rate if the last job incurred $1,550 in direct material cost, 90 direct labor hours, and 75 machine hours. Wages are paid at $16 per hour.
Complete this question by entering your answers in the tabs below. Required A Required B Which alternative should the company choose? The total cost of the "make" alternative is by Therefore, the company should the part.
Part S51 is used in one of Baxter Corporation's products. The company makes 12,000 units of this part each year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direct materials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit S S S S O ($5,800) O ($22,800) O ($149,800) O ($39,800) S 6.30 5.70 4.80 7.00 8.60 7.20 An outside supplier has offered to produce this part and sell it to the company for $37.70 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $17,000 of these allocated general overhead costs would be avoided. The…
Help Save Recher Corporation uses part Q89 In one of Its products. The company's Accounting Department reports the following costs of producing the 7,100 units of the part that are needed every year. Par Unit $ 7.50 $ 4.10 $ 8.00 $ 3.00 $ 2.50 $ 1.30 Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead An outside supplier has offered to make the part and sell it to the company for $26.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $3,200 of these allocated general overhead costs would be avoided. In addition, the space used to produce part Q89 could be used to make more of one of the…
Part S51 is used in one of Haberkorn Corporation's products. The company makes 12,000 units of this part each year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead $6.30 $5.70 $4.80 $7.00 $8.60 $7.20 An outside supplier has offered to produce this part and sell it to the company for $37.70 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $17,000 of these allocated general overhead costs would be avoided. The annual financial advantage (disadvantage) for the…
Rebelo Corporation is presently making part E07 that is used in one of its products. A total of 17,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direct materials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $ 3.80 $ 3.80 $ 1.10 $ 2.50 $ 1.40 $ 8.60 An outside supplier has offered to make and sell the part to the company for $20.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. If management decides to buy part E07 from the…
570 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 9,000 units of the part that are needed every year. $15.60 $6.40 $5.40 $1.80 $5.50 Per Unit Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead $3.20 An outside supplier has offered to make the part and sell it to the company for $23.5 each. If this offer is accepted, the supervisor's salary and all of the variable costs can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outs…
Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the following costs of producing the 8,300 units of the part that are needed every year. Per Unit Direct materials $ 7.10 Direct labor $ 4.00 Variable overhead $ 7.90 Supervisor's salary $ 3.00 Depreciation of special equipment $ 2.60 Allocated general overhead $ 1.40 An outside supplier has offered to make the part and sell it to the company for $25.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $2,800 of these allocated general overhead costs would be avoided. In addition, the space used to produce part Q89 could be used to make more of…

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