Problem - Department 7 of the Arbia Company manufactures a variety of components for products, one of which is Part No. 211. Data on this part are as follows:
|
|
Monthly Planned Cost
|
Actual Cost July
|
|
|
Per Unit
|
Per Unit
|
Total
|
|
Directmaterial and direct labor
|
$30.17
|
$29.83
|
$29,820
|
|
Fixed costs, Department 7
|
6.49
|
6.88
|
6,880
|
|
Costs allocated to Department 7
|
13.83
|
24.29
|
14,290
|
|
|
$50.49
|
$61.00
|
$50,990
|
Part No. 211 can be purchased from an outside vendor for 31.00.
Required: What costs are relevant for each of the following purposes?
a) For preparing financial statements for July?
b) For deciding whether to make or buy Part No. 211?
c) For assessing the performance of the manager of Department 7?