Make or Buy, Qualitative Considerations Hetrick Dentistry Services operates in a large metropolitan area. Currently, Hetrick has its own dental laboratory to produce porcelain and gold crowns. The unit costs to produce the crowns are as follows: Porcelain Gold Raw materials $ 70 $130 Direct labor 27 27 Variable overhead 8. Fixed overhead 22 22 Total $127 $187 Fixed overhead is detailed as follows: Salary (supervisor) $26,000 Depreciation 5,000 Rent (lab facility) 32,000 Overhead is applied on the basis of direct labor hours. These rates were computed by using 5,500 direct labor hours. A local dental laboratory has offered to supply Hetrick all the crowns it needs. Its price is $125 for porcelain crowns and $150 for gold crowns; however, the offer is conditional on supplying both types of crowns-it will not supply just one type for the price indicated. If the offer is accepted, the equipment used by Hetrick's laboratory would be scrapped (it is old and has no market value), and the lab facility would be closed. Hetrick uses 2,000 porcelain crowns and 600 gold crowns per year.

Make or Buy, Qualitative Considerations Hetrick Dentistry Services operates in a large metropolitan area. Currently, Hetrick has its own dental laboratory to produce porcelain and gold crowns. The unit costs to produce the crowns are as follows: Porcelain Gold Raw materials $ 70 $130 Direct labor 27 27 Variable overhead 8. Fixed overhead 22 22 Total $127 $187 Fixed overhead is detailed as follows: Salary (supervisor) $26,000 Depreciation 5,000 Rent (lab facility) 32,000 Overhead is applied on the basis of direct labor hours. These rates were computed by using 5,500 direct labor hours. A local dental laboratory has offered to supply Hetrick all the crowns it needs. Its price is $125 for porcelain crowns and $150 for gold crowns; however, the offer is conditional on supplying both types of crowns-it will not supply just one type for the price indicated. If the offer is accepted, the equipment used by Hetrick's laboratory would be scrapped (it is old and has no market value), and the lab facility would be closed. Hetrick uses 2,000 porcelain crowns and 600 gold crowns per year.

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Description: Make or Buy, Qualitative ConsiderationsHetrick Dentistry Services operates in a large metropolitan area. Currently, Hetrick has its own dental laboratory to produce porcelain and gold crowns.The unit costs to produce the crowns are as follows:Porcel

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 1MC: Active Frame, Inc., manufactures clear and tinted sport glasses. The manufacturing of clear glasses...

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Active Frame, Inc., manufactures clear and tinted sport glasses. The manufacturing of clear glasses takes 45,000 direct labor hours and involves 1,700 parts and 115 inspections. The manufacturing of tinted glasses takes 115,000 direct labor hours and involves 1,400 parts and 450 inspections. The traditional method applies $560,000 of overhead on the basis of direct labor hours. What is the amount of overhead per direct labor hour applied to the clear glass products? A. $933.33 B. $157,500 C. $322.500 D. $402,500
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Make or Buy, Qualitative Considerations Hetrick Dentistry Services operates in a large metropolitan area. Currently, Hetrick has its own dental laboratory to produce porcelain and gold crowns. The unit costs to produce the crowns are as follows: Overhead is applied on the basis of direct labor hours. These rates were computed by using 5,500 direct labor hours. A local dental laboratory has offered to supply Hetrick all the crowns it needs. Its price is $125 for porcelain crowns and $150 for gold crowns; however, the offer is conditional on supplying both types of crowns-it will not supply just one type for the price indicated. If the offer is accepted, the equipment used by Hetrick's laboratory would be scrapped (it is old and has no market value), and the lab facility would be closed. Hetrick uses 2,000 porcelain crowns and 600 gold crowns per year. Required: 1. CONCEPTUAL CONNECTION Should Hetrick continue to make its own crowns, or should they be purchased from the external…
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