Kingbird Company must decide whether to make or buy some of its components. The costs of producing 60,100 switches for its generators are as follows. Direct materials $29,449 Variable overhead $60,100 Direct labour 42,671 Fixed overhead 59,499 Instead of making the switches at an average cost of $3.19 ($191,719 ÷ 60,100), the company has an opportunity to buy the switches at $2.99 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated. Prepare an incremental analysis showing whether the company should make or buy the switches. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).) Number of units: +A $ Per Unit +A $ Make
Kingbird Company must decide whether to make or buy some of its components. The costs of producing 60,100 switches for its generators are as follows. Direct materials $29,449 Variable overhead $60,100 Direct labour 42,671 Fixed overhead 59,499 Instead of making the switches at an average cost of $3.19 ($191,719 ÷ 60,100), the company has an opportunity to buy the switches at $2.99 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated. Prepare an incremental analysis showing whether the company should make or buy the switches. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).) Number of units: +A $ Per Unit +A $ Make
Chapter5: Process Costing
Section: Chapter Questions
Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...
Related questions
Question
Sagar
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
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…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
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…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning