Calculate the total relevant cost per unit and total

Assignment Help Accounting Basics

Reference no: EM131884798

Problem

Jordan Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Jordan produces and sells only 7,700 bikes each year. Due to the low volume of activity, Jordan is unable to obtain the economies of scale that larger producers achieve. For example, Jordan could buy the handlebars for $40 each; they cost $43 each to make. The following is a detailed breakdown of current production costs.

Item	Unit Cost	Total
Unit-level costs
Materials	17	130,900
Labor	11	84,700
Overhead	3	23,100
Allocated facility-level costs	12	92,400
Total	43	331,100

After seeing these figures, Jordan's president remarked that it would be foolish for the company to continue to produce the handlebars at $43 each when it can buy them for $40 each.

Required

Calculate the total relevant cost per unit and total.

Do you agree with the president's conclusion?

Reference no: EM131884798

Questions Cloud

What is the firms total book value : A company has total assets of $5.5 million, total liabilities of $2.5 million, and $440,000worth of 8% preferred stocks outstanding?

How many labor hours should johnson estimate are needed : How many labor hours should Johnson estimate are needed for additional 12 units? How much should Johnson estimate parts cost will be for additional 12 units?

What dates are relevant for dividends : What dates are relevant for dividends? Are all dividends paid in cash?Are dividends paid out tax-deductible for the corporation?

Complete the table about petty enterprises : There are 3,000 common shares outstanding with a total market value of $150,000. The interest rate on the new debt will be 14%. Assume no taxes.

Calculate the total relevant cost per unit and total : Jordan Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles. Calculate the total relevant cost per unit and total.

Calculate the non-depreciable investment : Assume that no special building or site preparation is required. Use the equipment component of the CE index to update costs.

How the adjusting entry to recognize depreciation expense : How the adjusting entry to recognize depreciation expense at the end of Year 3 will affect the Company's financial statements?

How much of the nonrecourse debt is allocated to jokan : how much of the nonrecourse debt is allocated to Jokan and what is the amount of Jokan's basis in the LLC interest following the contribution?

Determine the differential cost of producing product c : Jones Co. can further process Product B to produce Product C. Product B is currently selling for $30.00. Determine the differential cost of producing Product C.

User Account

All Pages