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Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units): Direct materials $ 29 Direct labor 105 Variable overhead 16 Fixed overhead 42 Total $192 Trailblazers has offered to sell the assembly to Mobility for $161 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $35,350. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) 8 Answer is not complete. Status Alternative Difference Quo Trailblazers' offer Materials Labor Variable overhead Fixed overhead applied Total costs b. Should Mobility make rear wheel assemblies or buy them from Trailblazers?

Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units): Direct materials $ 29 Direct labor 105 Variable overhead 16 Fixed overhead 42 Total $192 Trailblazers has offered to sell the assembly to Mobility for $161 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $35,350. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) 8 Answer is not complete. Status Alternative Difference Quo Trailblazers' offer Materials Labor Variable overhead Fixed overhead applied Total costs b. Should Mobility make rear wheel assemblies or buy them from Trailblazers?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
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Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. 

Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units): Direct materials Direct labor Variable overhead $ 29 105 16 Fixed overhead 42 Total $ 192 Trailblazers has offered to sell the assembly to Mobility for $161 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $35,350. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) * Answer is not complete. Status Alternative Difference Quo Trailblazers' offer Materials Labor Variable overhead Fixed overhead applied Total costs $ b. Should Mobility make rear wheel assemblies or buy them from Trailblazers?
Transcribed Image Text:Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units): Direct materials Direct labor Variable overhead $ 29 105 16 Fixed overhead 42 Total $ 192 Trailblazers has offered to sell the assembly to Mobility for $161 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $35,350. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) * Answer is not complete. Status Alternative Difference Quo Trailblazers' offer Materials Labor Variable overhead Fixed overhead applied Total costs $ b. Should Mobility make rear wheel assemblies or buy them from Trailblazers?
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