An outside supplier has offered to provide Cotton with the 10,000 subcomponents at an $84.50 per-unit price. No portion of fixedoverhead is avoidable. If Cotton accepts the outside offer, what will be the effect on short-term profits?Multiple Choice$195,000 decreaseNo change$260,000 increase$65,000 increase Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadTotal unit costCost perUnit$ 32.5013.0019.5026.00$91.00An outside supplier has offered to provide Cotton with the 10,000 subcomponents at an $84.50 per-unit price. No portion of fixedoverhead is avoidable. If Cotton accepts the outside offer, what will be the effect on short-term profits?

"Short-term profits" are financial gains or earnings earned by a business over a relatively short…

Answered: $84.50 per-ur An outside supplier has…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 4BE

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Listed below are a company’s monthly unit costs to manufacture and market a particular product.Unit Costs Variable Cost Fixed CostsDirect materials P2.00 Direct labor 2.40 Indirect Manufacturing 1.60 P1.00Marketing 2.50 1.50The company must decide to continue making the product or buy it from an outside supplier. The supplier has offered to make the product at the same level of quality that the company can make it. Fixed marketing costs would be unaffected, but variable marketing costs would be reduced by 30% if the company were to accept the proposal. What is the maximum amount per unit that the company can pay the supplier without decreasing its operating income? • P5.25 • P7.75 • P6.75 • P8.50 • None of the above
2 kipped Tirri Corporation has provided the following information: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Sales commissions Variable administrative expense Fixed selling and administrative expense Multiple Choice O $13.35 Help If the selling price is $28.20 per unit, the contribution margin per unit sold is closest to: $8.15 $16.70 $10.05 Save & Exit Submit Cost per Uni $ 7.55 $ 3.95 $ 1.60 $ 1.10 $ 0.65
Question Content Area If variable manufacturing costs are $18 per unit and total fixed manufacturing costs are $542,700, what is the manufacturing cost per unit if: a. 6,700 units are manufactured and the company uses the variable costing concept?$fill in the blank 1 b. 8,100 units are manufactured and the company uses the variable costing concept?$fill in the blank 2 c. 6,700 units are manufactured and the company uses the absorption costing concept?$fill in the blank 3 d. 8,100 units are manufactured and the company uses the absorption costing concept?$fill in the blank 4
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Variable and Fixed Costs, Cost Formula, High-Low Method Li Ming Yuan and Tiffany Shaden are the department heads for the accounting department and human resources department, respectively, at a large textile firm in the southern United States. They have just returned from an executive meeting at which the necessity of cutting costs and gaining efficiency has been stressed. After talking with Tiffany and some of her staff members, as well as his own staff members, Li Ming discovered that there were a number of costs associated with the claims processing activity. These costs included the salaries of the two paralegals who worked full time on claims processing, the salary of the accountant who cut the checks, the cost of claims forms, checks, envelopes, and postage, and depreciation on the office equipment dedicated to the processing. Some of the paralegals time appears to vary with the routine processing of uncontested claims, but considerable time also appears to be spent on the claims that have incomplete documentation or are contested. The accountants time appears to vary with the number of claims processed. Li Ming was able to separate the costs of processing claims from the costs of running the departments of accounting and human resources. He gathered the data on claims processing cost and the number of claims processed per month for the past 6 months. These data are as follows: Required: 1. Classify the claims processing costs that Li Ming identified as variable and fixed. 2. What is the independent variable? The dependent variable? 3. Use the high-low method to find the fixed cost per month and the variable rate. What is the cost formula? 4. CONCEPTUAL CONNECTION Suppose that an outside company bids on the claims processing business. The bid price is 4.60 per claim. If Tiffany expects 75,600 claims next year, should she outsource the claims processing or continue to do it in-house?
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Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $86 per unit, and fixed manufacturing costs are $193,200. Sales are estimated to be 6,900 units. If an amount is zero, enter "0". Round intermediate calculations to the nearest cent and your final answers to the nearest dollar. a. How much would absorption costing operating income differ between a plan to produce 6,900 units and a plan to produce 9,200 units? X b. How much would variable costing operating income differ between the two production plans? ✓

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$84.50 per-ur An outside supplier has offered to provide Cotton with the 10,000 overhead is avoidable. If Cotton accepts the outside offer, what will be the effect on short-term profits? Multiple Choice O $195,000 decrease No change O $260,000 increase