1. What are the alternatives facing Zion Manufacturing with respect to List the relevant costs for each alternative. If required, round your answers to the nearest cent. Total Relevant Cost Make $ per unit Buy $ per unit Differential Cost to Make $ per unit If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease? $ 3. Conceptual Connection: Which alternative is better?
1. What are the alternatives facing Zion Manufacturing with respect to List the relevant costs for each alternative. If required, round your answers to the nearest cent. Total Relevant Cost Make $ per unit Buy $ per unit Differential Cost to Make $ per unit If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease? $ 3. Conceptual Connection: Which alternative is better?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 39E
Related questions
Question
Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $11 each. Zion uses 4,900 units of Component K2 each year. The cost per unit of this component is as follows:
Direct materials | $7.23 |
Direct labor | 2.14 |
Variable overhead | 1.29 |
Fixed overhead | 4.00 |
Total | $14.66 |
1. What are the alternatives facing Zion Manufacturing with respect to
List the relevant costs for each alternative. If required, round your answers to the nearest cent.
Total Relevant Cost | |
Make | $ per unit |
Buy | $ per unit |
Differential Cost to Make | $ per unit |
If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease?
$
3. Conceptual Connection: Which alternative is better?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub