Help Daily Kneads, Inc., is thinking about having one of its products made by a supplier. The supplier will charge $6,000 for 1,000 units. Currently, Daily Kneads' costs to make 1,000units of this product are as follows:Cost per unitCost of 1,000 unitsDirect labor$4$4,000Direct materials$1$1,000Allocated Unavoidable Fixed Costs$2$2,000Total costs$7$7,000Calculate the relevant incremental cost of making each unit: $per unit

This whole question is based on the concept is Relevant cost What is Relevant cost? In simple words,…

Answered: Calculate the relevant incremental cost…

Business

Accounting

Calculate the relevant incremental cost of making each unit: $

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 2EB: Boarders estimates overhead will utilize 160,000 machine hours and cost $80,000. It takes 4 machine...

See similar textbooks

Related questions

Q: Determine the

A: Financial Accounting Standards Board defines consolidated financial statements reporting as…

Q: 26. Per the Fraud Examiners Manual, which of the following is NOT true about pass-through shell…

A: A sales representative at a real supplier sets up a shell company and convinces the budget owner or…

Q: Techstreet.com is a small web design business that provides services for two main types of websites:…

A: The answer is stated below:

Q: The finance function is primarily interested in the relationship between the risks of investments…

A: As per the guidelines, only one question is allowed to be solved. please resubmit the question…

Q: Which of the following does define investment property? a. Property held to earn rentals b. Right…

A: Investment properties are defined as 'held not for consumption in the business operations but as…

Q: 1. Gems Co. had net incom the period was 100,000 sh had an option price of S30 stock during the year…

A: Shareholders also invest money in the company and in return they become the owners in proportion to…

Q: Determine the consolidated expenses to be reported for the year.

A: Consolidated balance sheet A consolidated balance sheet refers to a document that provides the…

Q: On January 1, 20x8,Parent Company purchased 80% of the outstanding shares of Subsidiary Company for…

A: Non-controlling interest refers to those shareholders that hold less than 50% of the shareholding of…

Q: ez and Marshall are in Partnership operating a manufacturing business. They share profit in the…

A: 1 Factory Equipment at cost 26000 2 Office-Motor Vehicles at cost 36800…

Q: Multiple-Product Break-Even and Target Profit Vandenberg, Inc., produces and sells two products: a…

A: Cost-volume-profit analysis shows the relationship between the cost and volume level to get a…

Q: Where did you get the $5000 on d??

A: The maximum allowable charitable contribution is 60% of AGI, which is $108,000 ($180,000 × 60%). R…

Q: Ricardo Aninang established business on April 1,2017 and invested P5,000 cash and a building valued…

A: The Financial transactions of the business effects two or more accounts of the business with net…

Q: What is Jones Company's return on assets (ROA) for the year?

A: The ROA figure gives investors an idea of how effective the company is in converting the money it…

Q: On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash…

A: Calculation of Consolidated Expenses Particulars Amount Expenses of ABC…

Q: All of the following are possible responses to a pervasive weakness in internal control except:…

A: Internal Control: Internal control is a cycle, affected by an element's governing body, the…

Q: ( A manufacturing plant that m... A manufacturing plant that makes boomerangs has a fixed cost of…

A: the cost that has been incurred for production of an item is the total cost which includes…

Q: Accounting In 2021 Ron and Hermione made the following contributions to the following organizations.…

A: In this question, we will Show Work for any potential partial credit of Ron and Hermione in 2022.

Q: Exercise 12-11 (Algo) Estimating costs based on behavior patterns LO 3 Larry estimates that the…

A: Depreciation is a term used in accounting to describe a method of distributing the cost of a…

Q: Prepare the JOURNAL ENTRY to record the transactions of DALISAY Tailoring Shop for the month of…

A: Accounting System- An accounting system is a system for managing a business's spending, income, and…

Q: 4. The stock of material held on 1-4-2018 was 400 units @ RO 50 per unit. The following receipts and…

A: Under FIFO (First In First Out) method of inventory valuation, the units which are purchased first…

Q: 8 km/h. The rated operating width of the machine is 2 m. The annual utilisation of the combine is A…

A: The cost volume profit analysis is a costing method that helps in analyzing the impact of various…

Q: Which of the following items is classified as PPE? Land being sold in the ordinary course of…

A: Noncurrent assets like PP&E have a useful life of more than one year, but usually, they last for…

Q: The 2021 comparative balance sheet and income statement of Auga Company Ltd, have just been…

A: The question is related to Cash Flow Statement. Cash Flow Statement is summary of cash receipts and…

Q: As expert, re-write the above description correcetly.

A: Inventory is the goods which the company is having and which the company has held in order to sell…

Q: avy Johnson is CFO for a newly formed manufacturing company. Below is the anticipated monthly…

A: The budget is prepared to record the requirements for the future period and estimate the expenses…

Q: 3. The price of a certain item is P1,000, payable in O days but if paid in 30 days there will be a…

A: Formula: Simple Interest = Principle X Rate X Time/365 days

Q: Sales (18,000 units) Variable expenses Contribution margin Fixed expenses $ 360,000 144,eee 216,000…

A: CM ratio is calculated as ratio of contribution margin and sales

Q: Answer TRUE or False to the following statements/questions: A) Does the statement of cash flows…

A: The question is related to the Cash Flow Statement. Cash Flow Statement is summary of cash receipts…

Q: Electro Company gives warranties at the time of sale to purchasers of its product. The entity…

A: Solution Warranty expenses is the liability of a seller for the goods which he.has sold when that…

Q: QUESTION 18 Upload a full solution to the following question. Shawn was hired and agreed to…

A: Solution:- Given, Shawn was hired and agreed to compensation of $36.88 per hour Weekly hours = 44…

Q: A business has selling price of P 129.50 with an average variable cost of P 54.40. Fixed costs are P…

A: Solution: Selling price per unit = P129.50 Variable cost per unit = P54.40 Contribution margin per…

Q: Pls answer number 15 with solutions An entity is the defendant in a patent infringement lawsuit. The…

A: A Provision should be recognized in the books of accounts only when the amount and the liability are…

Q: Pls answer number 9 with solutions QUELL Co. owes PUT DOWN Bank ₱4,000,000 plus accrued interest of…

A: The loan is the financial assistance taken from the third party as a debt that is repayable along…

Q: ABC Company acquired all of XYZ Corporation’s assets and liabilities on June 30, 20X1. XYZ reported…

A: Net Assets: Net Assets is the differential amount of total assets and total obligations of a…

Q: What are the benefits to including multiple perspectives in teams?

A: It is important to look at topics from multiple perspectives so that we are able to see the whole…

Q: Chapter 9: A Closer look on Cost Accounting 15. The EUP is 57,000 units. The beginning inventory…

A: FIFO means the first in first in which the degree of opening work in progress will be considered and…

Q: The equity of the corpor be $200,000. John forg rnoration

A: It refers to the individuals that provide liquidity to the company and in return, the company offers…

Q: product

A: Let selling price be X Current assets = 12000X x 60% = 7200X ROI = (Current assets + Fixed assets)…

Q: On January 1, 20x8,Parent Company purchased 80% of the outstanding shares of Subsidiary Company for…

A: Total Assets refer to the total amount of assets held by the parent and subsidiary at the fair…

Q: During 2020, Leni Robredo entered in a non-cancellable commitment to purchase 320,000 units of…

A: As per IAS 2 , Inventory is to be measured at lower of cost or Net realizable value. Further…

Q: Prepare the JOURNAL ENTRY to record the transactions of DALISAY Tailoring Shop for the month of…

A: A Journal is a book in which business transactions are recorded in the order in which they occur,…

Q: Amazon purchased a piece of land for $5 million and plans to build a $25 million distribution…

A: The term depreciation refers to the method of calculation used to allocate the cost of a tangible or…

Q: negative figure.

A: Cash flow is the inflow and outflow of cash and helps in determining the net cash balance with the…

Q: Bramble Company purchased equipment for $15600 on December 1. It is estimated that annual…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: he percenta

A: Consolidated net income is the income of the parent company which does not include any income from…

Q: Amount (in Normal balances) 239,186 353,700 504,944 (1)? 83,259 1,594,927 110,800 (2)? (3)? Account…

A: The balance sheet represents the financial position of the business with total assets, total…

Q: A xerox machine was purchased 7 years ago costs P50,000. After making 600,000 copies, the salvage…

A: The book value of asset is calculated as difference between cost price and Accumulated depreciation…

Q: How to do this. Please explain. Thank you.

A: Price variance = ( Actual unit cost - Standard unit cost ) x Actual quantity purchased

Q: The INERT partnership shows the following profit & loss ratio & capital balances: P 194,000 P 52,000…

A: "Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: For each of the transactions below, indicate the account to be debited or credited by placing the…

A: Solution: As per double entry system, every financial transactions affects atleast two accounts, one…

Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

100%

Help

Daily Kneads, Inc., is thinking about having one of its products made by a supplier. The supplier will charge $6,000 for 1,000 units. Currently, Daily Kneads' costs to make 1,000
units of this product are as follows:
Cost per unit
Cost of 1,000 units
Direct labor
$4
$4,000
Direct materials
$1
$1,000
Allocated Unavoidable Fixed Costs
$2
$2,000
Total costs
$7
$7,000
Calculate the relevant incremental cost of making each unit: $
per unit

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?
Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin is $25 per unit and $40 s used in direct labor, while the direct material for the double is $40 per unit, and the labor cost is $50 per unit. Box Springs estimates it will make 5,000 twins and 9,000 doubles in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?
Box Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen is $35 per unit and $55 is used in direct labor, while the direct material for the king is $55 per unit, and the labor cost is $70 per unit. Box Springs estimates it will make 4,300 queens and 3,000 kings in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?
Carltons Kitchens makes two types of pasta makers: Strands and Shapes. The company expects to manufacture 70,000 units of Strands, which has a per-unit direct material cost of $10 and a per-unit direct labor cost of $60. It also expects to manufacture 30.000 units of Shapes, which has a per-unit material cost of $15 and a per-unit direct labor cost of $40. It is estimated that Strands will use 140,000 machine hours and Shapes will require 60,000 machine hours. Historically, the company has used the traditional allocation method and applied overhead at a rate of $21 per machine hour. It was determined that there were three cost pools, and the overhead for each cost pool is shown: The cost driver for each cost pool and its expected activity is shown: A. What is the per-unit cost for each product under the traditional allocation method? B. What is the per-unit cost for each product under ABC costing?
Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35. If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how much will profits increase if 200 more hours of machine time can be obtained?
Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35. If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how many of each product should be made?
Bobcat uses a traditional cost system and estimates next years overhead will be $800.000, as driven by the estimated 25,000 direct labor hours. It manufactures three products and estimates the following costs: If the labor rate is $30 per hour, what is the per-unit cost of each product?
Colonels uses a traditional cost system and estimates next years overhead will be $480,000, with the estimated cost driver of 240,000 direct labor hours. It manufactures three products and estimates these costs: If the labor rate is $25 per hour, what is the per-unit cost of each product?
Tucariz Company processes Duo into two joint products, Big and Mini. Duo is purchased in 1,000-gallon drums for 2.000. Processing costs are 3,000 to process the 1,000 gallons of Duointo 800 gallons of Big and 200 gallons of Mini. The selling price is 9 per gallon for Big and4 per gallon for Mini. If the physical units method is used to allocate joint costs to the finalproducts, the total cost allocated to produce Mini is: a. 500. b. 4,000. c. 1,000. d. 4,500.
The following product Costs are available for Haworth Company on the production of chairs: direct materials, $15,500; direct labor, $22.000; manufacturing overhead, $16.500; selling expenses, $6,900; and administrative expenses, $15,200. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 7,750 equivalent units are produced, what is the equivalent material cost per unit? If 22,000 equivalent units are produced, what is the equivalent conversion cost per unit?
Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins of 300 and 600, respectively. Assume initially that Patz can sell all that is produced of either component. Part A requires two hours of assembly, and B requires five hours of assembly. The firm has 300 assembly hours per week. Required: 1. Express the objective of maximizing the total contribution margin subject to the assembly-hour constraint. 2. Identify the optimal amount that should be produced of each machine part and the total contribution margin associated with this mix. 3. What if market conditions are such that Patz can sell at most 75 units of Part A and 60 units of Part B? Express the objective function with its associated constraints for this case and identify the optimal mix and its associated total contribution margin.
Man OFort Inc. produces two different styles of door handles, standard and curved. The door handles go through a joint production molding process costing 29,000 per batch and producing 2,000 standard door handles and 1,000 curved door handles at the split-off point. Both door handles undergo additional production processes after the split-off point, but could be sold at that point: the standard style for 4 per door handle and the curved style for 2 per door handle. Determine the amount of joint production costs allocated to each style of door handle using the market value at split-off method.