PLEASE ANSWER ONES WITH RED "X' THANK YOU! 1. Conceptual Connection: Should Hetrick continue to make its own crowns, or should they be purchased from the external supplier?Purchase crowns from an external supplierWhat is the dollar effect of purchasing?$ 340,000 X Net savings2. CONCEPTUAL CONNECTION What qualitative factors should Hetrick consider in making this decision?1. Quality of crowns2. Reliability and promptness of producer3. The price of the crowns4. Reduction of workforce5. Increase in workforce6. Increase in fixed cost1,2 and 43. Conceptual Connection: Suppose that the lab facility is owned rather than rented and that the $32,000 is depreciation rather than rent. What effect does this have on the analysis inRequirement 1?It reducesthe cost of making the crowns to $ 367,000 x , which is lessthan the cost of buying. 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 thecrowns are as follows:PorcelainGoldRaw materials$ 70$130Direct labor2727Variable overhead8Fixed overhead2222Total$127$187Fixed overhead is detailed as follows:Salary (supervisor)$26,000Depreciation5,000Rent (lab facility)32,000Overhead 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 supplyingboth 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 nomarket value), and the lab facility would be closed. Hetrick uses 2,000 porcelain crowns and 600 gold crowns per year.

Solution:- 1)Calculation of dolor effect of purchasing as follows under:- Preparation of relevant…

ptual Connection: Shõüld Hêti continue to make its own crowns, or should they be purchased from tne external supplier? Purchase crowns from an external supplier What is the dollar effect of purchasing? 340,000 x Net savings 2. CONCEPTUAL CONNECTION What qualitative factors should Hetrick consider in making this decision? 1. Quality of crowns 2. Reliability and promptness of producer 3. The price of the crowns 4. Reduction of workforce 5. Increase in workforce 6. Increase in fixed cost 1,2 and 4 V 3. Conceptual Connection: Suppose that the lab facility is owned rather than rented and that the $32,000 is depreciation rather than rent. What effect does this have on the anal Requirement 1? It reduces - v the cost of making the crowns to 367,000 x which is less -v than the cost of buying.

ptual Connection: Shõüld Hêti continue to make its own crowns, or should they be purchased from tne external supplier? Purchase crowns from an external supplier What is the dollar effect of purchasing? 340,000 x Net savings 2. CONCEPTUAL CONNECTION What qualitative factors should Hetrick consider in making this decision? 1. Quality of crowns 2. Reliability and promptness of producer 3. The price of the crowns 4. Reduction of workforce 5. Increase in workforce 6. Increase in fixed cost 1,2 and 4 V 3. Conceptual Connection: Suppose that the lab facility is owned rather than rented and that the $32,000 is depreciation rather than rent. What effect does this have on the anal Requirement 1? It reduces - v the cost of making the crowns to 367,000 x which is less -v than the cost of buying.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 2PA: Five Card Draw manufactures and sells 24,000 units of Diamonds, which retails for $180, and 27,000...

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