Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 2,000 units). Direct materials Direct labor Variable overhead Fixed overhead Total $50 106 32 94 $282 Trailblazers has offered to sell the assembly to Mobility for $220 each. The total oftler would amount to 2,000 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $80,000 Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is i

Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 2,000 units). Direct materials Direct labor Variable overhead Fixed overhead Total $50 106 32 94 $282 Trailblazers has offered to sell the assembly to Mobility for $220 each. The total oftler would amount to 2,000 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $80,000 Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is i

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 4EA: Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on...

See similar textbooks

Similar questions

Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the following costs of producing the 8,200 units of the part that are needed every year. Per Unit Direct materials $ 7.60 Direct labor $ 4.30 Variable overhead $ 8.50 Supervisor's salary $ 3.30 Depreciation of special equipment $ 2.80 Allocated general overhead $ 1.50 An outside supplier has offered to make the part and sell it to the company for $28.00 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 $4,600 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…
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
Classify costs Cromwell Furniture Company manufactures sofas for distribution to several major retail chains. The following costs are incurred in the production and sale of sofas: Fabric for sofa coverings Wood for framing the sofas Legal fees paid to attorneys in defense of the company in a patent infringement suit, 25,000 plus 160 per hour Salary of production supervisor Cartons used to ship sofas Rent on experimental equipment, 50 for every sofa produced Straight-line depreciation on factory equipment Rental costs of warehouse, 30,000 per month Property taxes on property, plant, and equipment Insurance premiums on property, plant, and equipment, 25,000 per year plus 25 per 25,000 of insured value over 16,000,000 Springs for seat cushions Consulting fee of 120,000 paid to efficiency specialists Electricity costs of 0.13 per kilowatt-hour Salespersons salary, 80,000 plus 4% of the selling price of each sofa sold Foam rubber for cushion fillings Janitorial supplies, 2,500 per month Employer's FICA taxes on controller's salary of 180,000 Salary of designers Wages of sewing machine operators Sewing supplies Instructions Classify the preceding costs as either fixed, variable, or mixed. Use the following tabular headings and place an X in the appropriate column. Identify each cost by letter in the cost column.
Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. Lumber used to construct decks ($12.00 per square foot) Carpenter labor used to construct decks ($10 per hour) Construction supervisor salary ($45,000 per year) Depreciation on tools and equipment ($6,000 per year) Selling and administrative expenses ($35,000 per year) Rent on corporate office space ($34,000 per year) Nails, glue, and other materials required to construct deck (varies per job)
Solomon Bike Company makes the frames used to build its bicycles. During Year 2, Solomon made 20,000 frames; the costs incurred follow. Unit-level materials costs (20,000 units x $55) Unit-level labor costs (20,000 units x $56) Unit-level overhead costs (20,000 x $9) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs Allocated portion of facility-level costs Total costs Solomon has an opportunity to purchase frames for $112 each. Additional Information $ 1,100,000 1,120,000 180,000 96,000 79,000 240,000 520,000 $ 3,335,000 1. The manufacturing equipment, which originally cost $520,000, has a book value of $470,000, a remaining useful life of four and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $71,000 per year. years, 2. Solomon has the opportunity to purchase for $910,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value of…
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.
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…
TikTok Electronics manufactures an aluminium fibre tripod model “TRI-X” which sells for$1,600. The production cost computed per unit under traditional costing for each model in2019 was as follows:Traditional Costing TRIXDirect Materials $700Direct Labour ($20/hour) $120Manufacturing overhead ($38 per DLH) $228Total per unit cost $1, 048In 2019, TikTok Electronics manufactured 26,000 units of TRI-X. Under traditional costing, thegross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRIX as it has continuously failed to reach the gross profit target of $600. Before finalizing itsdecision, management asks TikTok Electronics management accountant to prepare an 3analysis using activity-based costing (ABC). The management accountant accumulates thefollowing information about overhead for the year ended December 31, 2019.Activity CostPoolsCost Drivers EstimatedOverheadExpected Use ofCost DriversPurchasing Number oforders$1,200,000 40,000Machine setups Number…
1) Outside-is-Cold Inc. must decide whether to make or buy the lining used in its winter coats. The cost of producing 60,000 linings for its winter coats are as follows. Per Unit Total Direct materials $0.50 $30,000 Direct labour 0.70 42,000 Variable overhead. 0.75 45,000 Fixed overhead 1.00 60,000 Total $2.95 $177,000 The company has an opportunity to buy the lining from an outside supplier at $2.75 per lining. If the company purchases the lining, all the variable costs and one third of the fixed costs will be eliminated. Should Outside-is-Cold Inc. make the lining? No, because it would cost $28,000 No, because they would save $6,000 Yes, because they would save $28,000 Yes, because they would save $6,000
Adams Bike Company makes the frames used to build its bicycles. During Year 2, Adams made 22,000 frames; the costs incurred follow. Unit-level materials costs (22,000 units x $45) Unit-level labor costs (22,000 units x $50) Unit-level overhead costs (22,000 x $10) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs. Allocated portion of facility-level costs Total costs Adams has an opportunity to purchase frames for $112 each. Additional Information 1. The manufacturing equipment, which originally cost $560,000, has a book value of $490,000, a remaining useful life of four years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $73,000 per year. 2. Adams has the opportunity to purchase for $990,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value of $20,000. This equipment will increase productivity substantially, reducing…
TikTok Electronics manufactures an aluminium fibre tripod model “TRI-X” which sells for$1,600. The production cost computed per unit under traditional costing for each model in2019 was as follows:Traditional Costing TRIXDirect Materials $700Direct Labour ($20/hour) $120Manufacturing overhead ($38 per DLH) $228Total per unit cost $1, 048In 2019, TikTok Electronics manufactured 26,000 units of TRI-X. Under traditional costing, the gross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRIX as it has continuously failed to reach the gross profit target of $600. Before finalizing its decision, management asks TikTok Electronics management accountant to prepare an analysis using activity-based costing (ABC). The management accountant accumulates the following information about overhead for the year ended December 31, 2019.Required:1. Calculate the activity rates for each of the overhead items using the four cost drivers. 2. Using the rates in (1) determine…
TikTok Electronics manufactures an aluminium fibre tripod model “TRI-X” which sells for$1,600. The production cost computed per unit under traditional costing for each model in2019 was as follows:Traditional Costing TRIXDirect Materials $700Direct Labour ($20/hour) $120Manufacturing overhead ($38 per DLH) $228Total per unit cost $1, 048In 2019, TikTok Electronics manufactured 26,000 units of TRI-X. Under traditional costing, thegross profit on TRI-X was $552 ($1,600-$1,048). Management is considering phasing out TRIX as it has continuously failed to reach the gross profit target of $600. Before finalizing itsdecision, management asks TikTok Electronics management accountant to prepare an3analysis using activity-based costing (ABC). The management accountant accumulates thefollowing information about overhead for the year ended December 31, 2019.Activity CostPoolsCost Drivers EstimatedOverheadExpected Use ofCost DriversPurchasing Number oforders$1,200,000 40,000Machine setups Number…