Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

The Knott Division of Wright Company produces rope. One-third of the Knott Division's output is sold to the Hammock Products division of Wright and the remainder is sold to outside customers. The Knott Division's estimated sales and standard cost data for the fiscal year ending Sept. 30 are as follows:

Hammock Products Outside Customers
Sales $ 17,500 $ 40,000
Variable Costs (10,000) (20,000)
Fixed Costs (3,000) (6,000)
Gross Margin 4,500 $ 14,000
Unit Sales 10,000 20,000

The Knott Division has an opportunity to purchase 10,000 feet of identical quality rope from an outside supplier at a cost of $1.50 per unit on a continuing basis. Assume that the Knott Division cannot sell any additional product to outside customers.

Should Wright allow its Knott Division to purchase the rope from the outside supplier, and why?

a. Yes, because buying the rope would save Wright Company $2,500
b. No, because making the rope would save Wright Company $2,500.
c. Yes, because buying the rope would save Wright Company $5,000.
d. No, because making the rope would save Wright Company $5,000

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M943449

Have any Question? 


Related Questions in Accounting Basics

1 do you believe economic principles like competition apply

1. Do you believe economic principles like competition apply in both private and public organizations? 2. Are there other public functions that might benefit from more competition, including competition from private firm ...

Classification of liabilities presented below are various

(Classification of Liabilities) Presented below are various account balances of K.D. Lang Inc. (a) Unamortized premium on bonds payable, of which $3,000 will be amortized during the next year. (b) Bank loans payable of a ...

Moonee ponds 3039max matters is a semi-retired physical

MOONEE PONDS 3039 Max Matters is a semi-retired physical education teacher and is starting a wholesale home gym sales business on the 1st September 2016, he is contributing the following assets and liabilities to commenc ...

Balanced scorecard for a service company american express

Balanced scorecard for a service company American Express Company is a major financial services company, noted for its American Express® card. Some of the performance measures used by the company in its balanced scorecar ...

Practice questionscompare and contrast marginal costing and

Practice questions: Compare and contrast marginal costing and throughput accounting.

Problem 1a two four-year-old companies are identical in all

Problem 1: a. Two four-year-old companies are identical in all respects except that Company A has used straight-line depreciation exclusively since inception while Company B has used double-declining balance depreciation ...

While auditing the financial statements of forble corp

While auditing the financial statements of Forble Corp. (which are to be included in a Securities Act registration statement), Ernie, a certified public accountant, fails to review any of Forble's journal entries, does n ...

Case title subsequent events - disclosure or financial

Case Title: Subsequent Events - Disclosure or Financial Statement Adjustment? Company ABC is a December 31 calendar year-end manufacturer of flammable liquids and powders with its corporate offices in Pennsylvania and ma ...

Contaminated blood culture specimens in the emergency

Contaminated Blood Culture Specimens in the Emergency Department: Making the Business Case for Improving Quality 1. Scenario. As part of an organization-wide performance improvement initiative to address the accuracy and ...

The costs listed below relate to a variety of different

The costs listed below relate to a variety of different decision situations. Cost Decision 1. Unavoidable fixed overhead Eliminate an unprofitable segment 2. Direct labor Make or buy 3. Original cost of old equipment Equ ...

  • 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