How much will alan save or lose, Cost Accounting

Assignment Help:

 Hale Company makes sets of wrenches. They are trying to decide whether to continue to make the case the wrenches are sold in, or to outsource it to another company. The direct material and direct labor cost to produce the cases total $2.00 per case. The overhead cost is $1.00 per case which consists of $0.40 in variable overhead which would all be eliminated if the case were bought from the outside supplier. The $0.60 of fixed overhead is based on expected production of 200,000 cases per year and consists of the salary of the case production manager of $40,000 per year and $80,000 in depreciation on equipment that would have no resale value. The manager would be laid off if the cases were bought externally. Additionally, if the case production were stopped, the space that it is using could be rented out for $20,000 per year. The outside supplier has offered to supply the cases for $2.80 per case. How much will Alan save or lose if the cases are bought externally?
A Save $0.40 per case
B Lose $0.20 per case
C Lose $0.80 per case
D Save $0.20 per case


Related Discussions:- How much will alan save or lose

Economic order quantity, KIW Ltd currently orders Material B in batches of ...

KIW Ltd currently orders Material B in batches of 2,500 kgs. Material B is consumed at a steady, known rate over the company's planning horizon of one year. The current usage is 40

Accounting 561, Your organization (City Rehab) has been approached by an MC...

Your organization (City Rehab) has been approached by an MCO looking for an exclusive arrangement for the rehabilitation of its hip replacement patients. The MCO is aggressively po

Manufacturing cost, Use a selected company or your current work environment...

Use a selected company or your current work environment to identify at least one cost or expense that would fit under each of the following categories: • Variable • Fixed • Mixed •

Outline of an abc system, Outline of an ABC System An ABC costing syst...

Outline of an ABC System An ABC costing system operates like given: Step 1 Find out an organization's major activities. Step 2 Find out the factors that identi

Pv ratio, Do I use the contribution per unit and the total sales for the de...

Do I use the contribution per unit and the total sales for the department in order to calculate the p/v ratio for a department

Cash Budgeting, Stopover industries ltd, a recently incorporated company pl...

Stopover industries ltd, a recently incorporated company plans to go into production next year. the following standard cost matrix has been assembled for one of the products it pro

Attainable standards and current standards, Attainable Standards and Curren...

Attainable Standards and Current Standards Although the standard must be set high sufficient that achievable and it has to be worked for. Attainable standards must provide a c

Student, i asking for start up

i asking for start up

Why is it important for financial statements, Why is it important for finan...

Why is it important for financial statements and other external reports to be based on generally accepted accounting principles?

Write Your Message!

Captcha
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