Old Camp Company manufactures awnings for its own line of tents. The company is currently operating at capacity and has received an offer from one of its suppliers to make the 13,000 awnings it needs for $28 each. Old Camp’s costs to make the awning are $15 in direct materials and $7 in direct labor. Variable manufacturing overhead is 70 percent of direct labor. If Old Camp accepts the offer, $45,000 of fixed manufacturing overhead currently being charged to the awnings will have to be absorbed by other product lines. Required: 1.Complete the incremental analysis for the decision to make or buy the awnings in the table provided below. 2. Should Old Camp continue to manufacture the awnings or should they purchase the awnings from the supplier? 3. Assuming that the capacity released by purchasing the awnings allowed Old Camp to record a profit of $22,000, should Old Camp continue to manufacture or purchase the awnings? Req 1 : Complete the incremental analysis for the decision to make or buy the awnings in the table provided below.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Old Camp Company manufactures awnings for its own line of tents. The company is currently operating at capacity and has received an offer from one of its suppliers to make the 13,000 awnings it needs for $28 each. Old Camp’s costs to make the awning are $15 in direct materials and $7 in direct labor. Variable manufacturing overhead is 70 percent of direct labor. If Old Camp accepts the offer, $45,000 of fixed manufacturing overhead currently being charged to the awnings will have to be absorbed by other product lines.
Required:
1.Complete the incremental analysis for the decision to make or buy the awnings in the table provided below.
2. Should Old Camp continue to manufacture the awnings or should they purchase the awnings from the supplier?
3. Assuming that the capacity released by purchasing the awnings allowed Old Camp to record a profit of $22,000, should Old Camp continue to manufacture or purchase the awnings?
Req 1 :
Complete the incremental analysis for the decision to make or buy the awnings in the table provided below.
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Req 2 :
Should Old Camp continue to manufacture the awnings or should they purchase the awnings from the supplier?
select one
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Assuming that the capacity released by purchasing the awnings allowed Old Camp to record a profit of $22,000, should Old Camp continue to manufacture or purchase the awnings?
select one
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