Calculate total relevant cost to make and net cost to buy

Assignment Help Financial Accounting

Reference no: EM131204841

Every year Kansas Company manufactures 5,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials $ 5 Direct labor 11 Variable manufacturing overhead 8 Fixed manufacturing overhead 10 Total $34 Verona Company has offered to sell 5,300 units of part 231 to Kansas for $33 per unit. If Kansas accepts Verona’s offer, its freed-up facilities could be used to earn $12,100 in contribution margin by manufacturing part 240. In addition, Kansas would eliminate 50% of the fixed overhead applied to part 231. (a) Calculate total relevant cost to make and net cost to buy.

Reference no: EM131204841

Questions Cloud

Compute the total manufacturing cost : Manufacturing cost flows LO C5 Compute the total manufacturing cost for a manufacturer with the following information for the month. Raw materials purchased $ 35,200 Raw materials used in production 65,000 Direct labor used 16,400 Factory supervisor ..

Determine capitalized cost of facilities improvement project : University needs your help in doing some economic analysis for a facilities improvement project. The initial construction cost is $10,000,000. Routine maintenance cost is expected to be $200,000 per year. Determine the capitalized cost of this facili..

Prepare monthly manufacturing overhead flexible budget : Thome Company uses a flexible budget for manufacturing overhead based on direct labor hours. Prepare a monthly manufacturing overhead flexible budget for 2014 for the expected range of activity, using increments of 1,800 direct labor hours.

Accounting events-earned cash revenues-paid cash expenses : Majka Company was started on January 1, 2016. During 2016, the company experienced the following three accounting events: (1) earned cash revenues of $31,300, (2) paid cash expenses of $14,100, and (3) paid a $2,400 cash dividend to its stockholders...

Calculate total relevant cost to make and net cost to buy : Every year Kansas Company manufactures 5,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials $ 5 Direct labor 11 Variable manufacturing overhead 8 Fixed manufacturing overhead 10 Tota..

Straight line method and units of production : On 1/1/2016 Trublood, Inc. purchased a piece of machinery for use in operations. The total acquisition cost was $33,000. The machine has an estimated useful life of 3 years and a residual value $3,000. Assume that the units produced by the machine wi..

Determine the variable overhead efficiency variance : Variable Overhead Variances Assume that the best cost driver that Sony has for variable factory overhead in the assembly department is machine hours. During April, the company budgeted 680,000 machine hours and $7,000,000 for its Texas plant's assemb..

How much will its income increase or decrease : The following operating information reports the results of McKinney Company’s production and sale of 16,000 air-conditioned motorcycle helmets last year. McKinney has sufficient idle capacity to fill the order, which would not affect the company’s co..

Discuss whether the casualty loss should be deducted : Esther owns a large home on the East Coast. Her home is surrounded by large, mature oak trees that significantly increase the value of her home. In August 2014, a hurricane damaged many of the trees surrounding her home. In September 2014, Esther eng..

User Account

All Pages