Should the company continue to manufacture the part

Assignment Help Accounting Basics
Reference no: EM131539980

Question: Santos Company currently manufactures one of its crucial parts at a cost of $3.40 per unit. This cost is based on a normal production rate of 50,000 units per year. Variable costs are $1.50 per unit, fixed costs related to making this part are $50,000 per year, and allocated fixed costs are $45,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Santos is considering buying the part from a supplier for a quoted price of $2.70 per unit guaranteed for a three-year period. Should the company continue to manufacture the part, or should it buy the part from the outside supplier? Support your answer with analyses.

Reference no: EM131539980

Questions Cloud

Describe the economic position of argentina : 1. Describe the economic position of Argentina, Brazil and Mexico in relation to the rest of Latin America.
Compute the payback period for two separate investments : A new operating system for an existing machine is expected to cost $260,000 and have a useful life of five years. The system yields an incremental after-tax.
What is spars return on investment for investment center : What is Spar's return on investment for this investment center? Sunk costs are costs that have proven to be unproductive.
What are some potential problems : What are some benefits? If the "red state/blue state" classification is not useful, what is a better way of explaining variation across states
Should the company continue to manufacture the part : Santos Company currently manufactures one of its crucial parts at a cost of $3.40 per unit. This cost is based on a normal production rate of 50,000 units.
Should the company sell the units as scrap or rework them : A company must decide between scrapping or reworking units that do not pass inspection. The company has 15,000 defective units that cost $6 per unit.
Discussion on the state of the macroeconomy : Thinking back to the discussion on the state of the macroeconomy, would you describe the economy as booming, recovering, or in recession during the last
Should xu keep or replace its manufacturing machine : Xu Company is considering replacing one of its manufacturing machines. The machine has a book value of $45,000 and a remaining useful life of 4 years.
Discussion on the state of the macroeconomy : Thinking back to the discussion on the state of the macroeconomy, would you describe the economy as booming, recovering, or in recession during the last few.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Cash 49280 account receivable 3400 supplies 2360 prepaid

a. record the expire rentb. supplies on hand 350c. depreciation400 equipment210 furniture 650 vehicled. service

  Describe the programmed input validation checks

Describe the programmed input validation checks that you find that prevent or detect the incorrect data input.

  Inventory to outsiders

Kardashian had purchased this inventory for $40,000 and sold it to West for $60,000. In 2015, West sold 60% of this inventory to its customers for $50,000 and paid ? of the amount due Kardashian Company. In 2016, West sold the remaining inventory to ..

  Compute the unit product cost of each model

Using direct labor-hours as the base for assigning overhead cost to products, compute the predetermined overhead rate. Using this rate and other data from the problem, determine the unit product cost of each model.

  Logans sales are 40 cash and 60 credit credit sales are

carter company earned net income of 350000 last year. this year it wants to earn net income of 450000. the companys

  Low cost mortgage keys for individuals

McBride Financial Services provides low cost mortgage keys for individuals. McBride Financial Services provides to retirees, experts, and families are thinking to buy whichever a recreational property or secondary or primary house.

  Lori luthen recently opened her own basketweaving studio

lori luthen recently opened her own basketweaving studio. she sells finished baskets in addition to the raw materials

  What is the target variable cost per mouse

A company believes it can sell 5,000,000 of its proposed new optical mouse at a price of $11.00 each. There will be $8,000,000 in fixed costs associated with the mouse. If the company desires to make a profit $2,000,000 on the mouse, what is the t..

  What would happen with the price you computed above if

airjet best parts inc. is concerned regarding recent changes in its stock prices for the company and would like to

  What is indigo corporation taxable income

What is Indigo Corporation's accumulated E & P at the start of the next year if its beginning balance this year is $200,000?

  Mackenzie roth has a 30 year 5 mortgage on his home the

mackenzie roth has a 30 year 5 mortgage on his home. the current monthly payment for the mortgage is 966.28. the

  Bond interest paid oct 31 2009 how much cash paid in

murcia corp. has 4000000 of 9.5 25yr bonds dated may 1 2009 with interest payable on april 30 and oct. 31. companys

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