Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Management Expert

1. Frogers Company produces 40,000 units per year of part it utilizes in products it produces. The unit product cost of this part is find outd as follows:

Direct materials $23.40
Direct labor 22.30
Variable manufacturing overhead 1.40
Fixed manufacturing overhead 24.60
Unit product cost $71.70

Outside supplier has offered to sell company all of these parts it requires for $59.20 a unit. If company accepts this offer, facilities now being used to prepare the part could be utilized to make more units of product that is in high demand. Extra contribution margin on this other product would be $352,000 per year.

If part were bought from outside supplier, all of direct labour cost of part would be avoided. Though, $21.90 of fixed manufacturing overhead cost being applied to part would continue even if part were bought from outside supplier. This fixed manufacturing overhead cost would be applied to company's remaining products.

Required:

a. How much of unit product cost of $71.70 is appropriate in decision of whether to make or purchase the part?

b. Compute the net total dollar advantage (disadvantage) of buying part rather than making it?

c. Determine the maximum amount company must be willing to pay the outside supplier per unit for part if supplier commits to supplying all 40,000 units needed each year?

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M931401

Have any Question? 


Related Questions in Business Management

Prepare a business plan for organic pabulums company and

Prepare a business plan for Organic Pabulums company and explain the platforms where it provide services. Instructions; Plan should explain about the following titles with examples; 1.GENERAL DESCRIPTION OF ORGANIC PABUL ...

Review 5 major steps of preparing an interpretive action

Review 5 major steps of preparing an Interpretive Action Research project. How does it differ from Experimental Survey research?

In 450 words with referenceshow has the history of

In 450 words with references: How has the history of healthcare compliance changed since its inception? Hint: Look at the ways in which penalties have increased in various ways. Describe your responsibilities as a health ...

You are interested in an investment project that cost 7500

You are interested in an investment project that cost $7,500 initially. The investment has a 5- year horizon and promises future end-of-year cash inflow of $2,000, $2,000, $2,000, $1,500, and $1,500, respectively. Your c ...

Money makes trade easier would having a money supply twice

Money makes trade easier. Would having a money supply twice as large as it is currently make trade twice as easy? Would having a money supply half its current size make trade half as easy? Explain.

Your supervisors have come to you and told you that they

Your supervisors have come to you and told you that they want to have a better understanding of Maslow's Hierarchy of Needs. Their reasoning is to have a better understanding of where the workers who report to them are c ...

Discuss two 2 strategies that they can use to enter the

Discuss two (2) strategies that they can use to enter the global market, and explain why these approaches would be appropriate and beneficial to the business.

Q1 the 6-month 12-month 18-month and 24-month interest

Q1. The 6-month, 12-month, 18-month, and 24-month interest rates are 1.50%, 1.75%, 2.00%, and 2.25% with continuous compounding. a. Calculate the present value of $100 in 1.5 years (=18 months). b. Calculate are the equi ...

A firm contemplating entering the market would need to

A firm contemplating entering the market would need to invest $100 million to build a minimum efficient scale production plant (or about $10 million annually on an amortized basis). Such a plant could produce about 100 m ...

Would a constitutional amendment that would require the

Would a constitutional amendment that would require the federal government to balance its budget (incur no deficits) be desirable? Explain.

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate