Fixed factory overhead costs

Assignment Help Managerial Accounting
Reference no: EM13303770

Lakers Company manufactures a part for its production cycle. The costs per unit for 5,000 units of this part are as follows:

Direct materials

$3

Direct labor

$5

Variable factory overhead

$4

Fixed factory overhead

$2

Total costs

$14

The fixed factory overhead costs are unavoidable.

Assume that Lakers Company has been offered 5,000 units of the part from another producer for $14 each. The facilities currently used could be used to make 5,000 units of a product that would contribute $5 a unit to cover fixed expenses.

make the new product and buy the part to earn an extra $3 per unit contribution to profit

make the new product and buy the part to earn an extra $1 per unit contribution to profit

continue to make the part to earn an extra $1 per unit contribution to profit

continue to make the part to earn an extra $3 per unit contribution to profit


Attachment:- MA-Assign3.doc

Reference no: EM13303770

Questions Cloud

What would happen to the short-run equilibrium price : What would happen to the short-run equilibrium price and quantity of magnesium if a major (economically large) magnesium mine had to close due to environmental regulation? Assume the supply is elastic and demand is inelastic.
What price do you think compressor controls should charge : How would you determine the value of this product and what price do you think Compressor Controls should charge for this product?
Determine the adiabatic flame temperature : Methane (CH4) is burned with the 20% dry excess air at 227C. Combustion occurs at one atmosphere. Determine the adiabatic flame temperature (C)
Determine whether or not mvp should proceed with expansion : The firm would also make year-end principal payments of $2,333,333 million per year, completely retiring the issue by the end of the third year. Using the Adjusted Present Value (APV) method, determine whether or not MVP should proceed with the ex..
Fixed factory overhead costs : The facilities currently used could be used to make 5,000 units of a product that would contribute $5 a unit to cover fixed expenses.
What would your index rate of return be : You have accumulated data on three stocks (see below). You have decided to use the information on these stocks to form an index. You want to find the average earned rate of return for 2011 on your index.
Which way of financing is the most expensive : Which way of financing is the cheapest (cost a firm least)? Which way of financing is the most expensive (cost a firm most)? Please rank these four ways of financing from the cheapest to the most expensive and discuss why.
Define the future-value-of-money formula : The future-value-of-money formula relates how much a current investment will be worth in the future, assuming a constant interest rate.
What is relationship between interest rate and bond price : What is the relationship between the interest rate and bond price? After you purchase a bond, would you like to see the interest rate increases or decreases to earn the capital gains? Why?

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Effect on the companys total net operating income

Prepare a report that shows the effect on the company's total net operating income of buying part A55 from the supplier rather than continuing to make it inside the company.

  Question on environmental management system

What are internal and external environmental factors that affect an environmental management system (EMS)? Which factors create the greatest challenge in planning an EMS? How could an EMS benefit healthcare organization?

  Compute the residual income for each division

Assume that the company evaluates performances using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division.

  Decision analysis - complete uncertainty

What action should (s)he select if (s)he followed the criterion of Maximin and Maximax

  Job costing-process costing-operations costing

How do job costing, operations costing and process costing differ? Give two typical examples of products or organizations for each system.

  Describe the purpose of a flexible budget

Describe the purpose of a flexible budget. Suppose a manager claims flexible budgets are useful because costs are difficult to predict and flexibility is needed to change budgeted costs as input prices change. Do you agree?

  Question on job-order costing system

Leija Manufacturing Company uses a job-order costing system and started the month of March with one job in process (Job #359). This job had $500 of cost assigned to it at this time. During March, Leija assigned production costs as follows to the j..

  Basics of cost-volume-profit

Feather Friends, Inc., distributes the high-quality wooden birdhouse which sells for $20 for each unit. Variable costs are $8 per unit, and fixed costs total $180,000 per year.

  Describe to margaret the normative ethical theories

Describe the key historical events up to 1900 that have shaped the development of accounting. How do these events support the notion accounting is socially constructed?

  What information does marco need to use the tools

Write a one page memo to Marco, in Word, answering the following questions and list three management tools that Marco can use to evaluate whether the new warehousing center will be a good investment.

  What would be the impact on profits

The annual fixed cost of $2,000,000 would be unaffected by the special order. What would be the impact on profits if Costa were to accept this special order?

  Discuss the changing role of management

Do you agree with the statement? Discuss the changing role of management accountants with reference to how it impacts on the current business environment.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd