Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis. Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost. Requirement-1: To calculate: Find Difference between in the cost between making and buying?

Question

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Answer 1

Question

Chapter 7, Problem 6E

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-1:

To calculate:

Find Difference between in the cost between making and buying?

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To calculate:

Should we buy the product or make them.

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To identify:

If Company making profit of $35000 currently then your advice changes or not?

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how can the changes below affect Mirabel’s overall cost structure. For those changes that are controllable, make a recommendation considering the uncontrollable cost changes. Be certain to consider not only the company’s break-even point, but also the desired margin of safety. If Mirabel purchases the new equipment for $1,200,000, it will increase fixed costs by 10% but will decrease the variable cost per unit for all 3 models by 5%. If Mirabel invests the additional $650,000 in fixed marketing expenses, sales of the Model 301 are expected to increase by 8%. If the projection is that sales will increase by 10% in the coming year. The sales volume remains fixed but there is a 5% increase in variable expenses (materials cost) for the Model 101 and 301, and a 10% increase in variable expenses for Model 201.

MSI is considering outsourcing the production of the handheld control module used with some of its products. The company has received a bid from Monte Legend Co. (MLC) to produce 10,000 units of the module per year for $16 each. The following information pertains to MSI’s production of the control modules: Direct materials $ 9 Direct labor 4 Variable manufacturing overhead 2 Fixed manufacturing overhead 3 Total cost per unit $ 18 MSI has determined that it could eliminate all variable costs if the control modules were produced externally, but none of the fixed overhead is avoidable. At this time, MSI has no specific use in mind for the space that is currently dedicated to the control module production. Suppose that the MSI space currently used for the modules could be utilized by a new product line that would generate $35,000 in annual profit. Recompute the difference in cost between making and buying under this scenario.

Cost Classifications for Decision Making Warner Corporation purchased a machine 7 years ago for $319,000 when it launched product P50. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 300 machine costing $313,000 or by a new model 200 machine costing $275,000. Management has decided to buy the model 200 machine. It has less capacity than the model 300 machine, but its capacity is sufficient to continue making product P50. Management also considered, but rejected, the alternative of dropping product P50 and not replacing the old machine. If that were done, the $275,000 invested in the new machine could instead have been invested in a project that would have returned a total of $374,000. Required: 1. What is the total differential cost regarding the decision to buy the model 200 machine rather than the model 300 machine? 2. What is the total sunk cost regarding the decision to buy the model 200 machine rather than the model…

Answer 2

Question

Chapter 7, Problem 6E

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-1:

To calculate:

Find Difference between in the cost between making and buying?

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To calculate:

Should we buy the product or make them.

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To identify:

If Company making profit of $35000 currently then your advice changes or not?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 7, Problem 6E

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-1:

To calculate:

Find Difference between in the cost between making and buying?

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To calculate:

Should we buy the product or make them.

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To identify:

If Company making profit of $35000 currently then your advice changes or not?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 7, Problem 6E

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-1:

To calculate:

Find Difference between in the cost between making and buying?

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To calculate:

Should we buy the product or make them.

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To identify:

If Company making profit of $35000 currently then your advice changes or not?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 7, Problem 6E

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-1:

To calculate:

Find Difference between in the cost between making and buying?

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To calculate:

Should we buy the product or make them.

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To identify:

If Company making profit of $35000 currently then your advice changes or not?

Answer 6

Chapter 7, Problem 6E

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-1:

To calculate:

Find Difference between in the cost between making and buying?

Answer 7

Chapter 7, Problem 6E

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-1:

To calculate:

Find Difference between in the cost between making and buying?

Answer 8

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To calculate:

Should we buy the product or make them.

Answer 9

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To calculate:

Should we buy the product or make them.

Answer 10

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To identify:

If Company making profit of $35000 currently then your advice changes or not?

Answer 11

To determine

Concept introduction:

Variable Cost: Those cost which are increases as the output of the product is increases are called variable cost and it remains same on per unit basis.

Fixed Cost: All those cost which are same in totality and incurred to the company irrespective of the output then it is called fixed cost.

Requirement-2:

To identify:

If Company making profit of $35000 currently then your advice changes or not?

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 7 - Briefly describe the five steps of the management...Ch. 7 - Suppose you are considering a part-time job to...Ch. 7 - Prob. 3Q Ch. 7 - What are criteria for a cost to be considered...Ch. 7 - Prob. 5Q Ch. 7 - Explain opportunity cost and list two opportunity...Ch. 7 - Why should opportunity costs be factored into the...Ch. 7 - Explain excess capacity and full capacity. Include...Ch. 7 - How e the concepts of full capacity and...Ch. 7 - Prob. 10Q

Solution Summary: The author explains the difference between variable cost and fixed cost. Variable cost increases as the output of the product increases.

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