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Q1) Marcus Company

You are a senior financial analyst for Marcus Company and your company assembles products from group of interconnecting parts. Some of parts are manufactured by company, and some are manufactured from outside vendors. Vendor for part X has informed you that they will be increasing their price effective next year to $12.00 per unit for first 5,000 units purchased and $9.00 for each additional unit purchased next year. Estimated annual usage of part X is 7,500 units.

After meeting with distribution and production managers, you determine the following information. No extra parts will be manufactured beyond what are required in year. If you decide to produce part X, the costs will be as follows:

Direct materials, $3.50 per unit.
Direct labor, $1.75 per unit.
Variable manufacturing overhead, $3.80 per unit.
Variable administrative expense, $1.65 per unit.
Current fixed manufacturing overhead, $18,000 annually.

1. Should you suggest that your company start manufacturing part X or should you continue to buy the part from your existing vendor for next year? Why?
purpose of this assignment is to find out a trend analysis and interpret the results.

Following sales and accounts receivable information is available for Partridge Pear Tree Company.

  2005 2006 2007
Net Sales $112,000 $136,000 $158,000
Accounts Receivable (net) $21,000 $32,000 $43,000

Using 2005 as base year, create a trend analysis on above data and tell whether results recommend a favorable or unfavorable trend and why.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M922656

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