Cullumber, Inc. uses 840 units of the component NJF1 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows: Direct materials Direct labor Overhead Total $69 52 The unit 100 $221 Overhead costs include variable material handling costs of $14 that are applied to products on the basis of direct material costs. The remainder of the overhead costs are applied on the basis of direct labor dollars and consist of 50% variable costs and 50% fixed costs. A vendor has offered to supply the NJF1 component at a price of $191 per unit. (a) Should Cullumber purchase the component from the outside vendor if its capacity remains idle? be purchased from the outside vendor.

Cullumber, Inc. uses 840 units of the component NJF1 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows: Direct materials Direct labor Overhead Total $69 52 The unit 100 $221 Overhead costs include variable material handling costs of $14 that are applied to products on the basis of direct material costs. The remainder of the overhead costs are applied on the basis of direct labor dollars and consist of 50% variable costs and 50% fixed costs. A vendor has offered to supply the NJF1 component at a price of $191 per unit. (a) Should Cullumber purchase the component from the outside vendor if its capacity remains idle? be purchased from the outside vendor.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 14EA: Cool Pool has these costs associated with production of 20,000 units of accessory products: direct...

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