Homework Help is Here – Start Your Trial Now!
Business
Accounting
Blossom Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 68% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 25,300 curtain rods per year. A supplier offers to make a pair of finials at a price of $12.95 per unit. If Blossom Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $46,400 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Direct materials Direct labor Variable overhead costs A Make Fixed manufacturing costs Purchase price Total annual cost +A $ A Net Income Buy Increase (Decrease) +A +A (b) Should Blossom Ranch buy the finials? Blossom Ranch should the finials. , (c) Would your answer be different in (b) if the productive capacity released by not making the finials could be used to produce income of $18,400? , income would by $

Blossom Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 68% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 25,300 curtain rods per year. A supplier offers to make a pair of finials at a price of $12.95 per unit. If Blossom Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $46,400 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Direct materials Direct labor Variable overhead costs A Make Fixed manufacturing costs Purchase price Total annual cost +A $ A Net Income Buy Increase (Decrease) +A +A (b) Should Blossom Ranch buy the finials? Blossom Ranch should the finials. , (c) Would your answer be different in (b) if the productive capacity released by not making the finials could be used to produce income of $18,400? , income would by $

Managerial Accounting
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...
See similar textbooks
icon
Related questions
Question
Blossom Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 68% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 25,300 curtain rods per year. A supplier offers to make a pair of finials at a price of $12.95 per unit. If Blossom Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $46,400 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Direct materials Direct labor Variable overhead costs A Make Fixed manufacturing costs Purchase price Total annual cost +A $ A Net Income Buy Increase (Decrease) +A +A
Transcribed Image Text:Blossom Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 68% of direct labor cost. The direct materials and direct labor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 25,300 curtain rods per year. A supplier offers to make a pair of finials at a price of $12.95 per unit. If Blossom Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $46,400 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. (a) Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Direct materials Direct labor Variable overhead costs A Make Fixed manufacturing costs Purchase price Total annual cost +A $ A Net Income Buy Increase (Decrease) +A +A
(b) Should Blossom Ranch buy the finials? Blossom Ranch should the finials. , (c) Would your answer be different in (b) if the productive capacity released by not making the finials could be used to produce income of $18,400? , income would by $
Transcribed Image Text:(b) Should Blossom Ranch buy the finials? Blossom Ranch should the finials. , (c) Would your answer be different in (b) if the productive capacity released by not making the finials could be used to produce income of $18,400? , income would by $
Expert Solution
steps

Step by step

Solved in 2 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS