An outside supplier has offered to sell 30000 units of part

Reference no: EM13599055

Han Products manufactures 30,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is as follows:

Direct materials
$ 3.60
Direct labor
10.00
Variable manufacturing overhead
2.40
Fixed manufacturing overhead
9.00
Total cost per part
$25.00

An outside supplier has offered to sell 30,000 units of part S-6 each year to Han Products for $21 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $80,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier. Prepare computations showing how much profits will increase or decrease if the outside supplier's offer is accepted.

Reference no: EM13599055

Questions Cloud

Maffei company which has only one product has provided the : maffei company which has only one product has provided the following data concerning its most recent month of

Sean who is single received social security benefits of : sean who is single received social security benefits of 8000 dividend income of 13000 and interest income of 2000.

For a publically traded company discuss what factors help : for a publically traded company discuss what factors help to determine the market value of stock. suggest the one

Mbi inc had sales of 1416 million for fy 2010 the companys : mbi inc. had sales of 141.6 million for fy 2010. the companys gross profit ratio for that year was 31.6assume that a

An outside supplier has offered to sell 30000 units of part : han products manufactures 30000 units of part s-6 each year for use on its production line. at this level of activity

Compute the equivalent units of production for the first : the colorado company manufactures a product that goes through three processing departments. information relating to

There was no work-in-process inventory at the beginning of : cheung company produced 10000 units during the past year but only 8500 of the units were sold. the following additional

Xavier and yolanda have original investments of 50000 and : 1. xavier and yolanda have original investments of 50000 and 100000 respectively in a partnership. the articles of

Klumm company sells the fishing lures for 25 during 2011 : klumm company builds custom fishing lures for sporting goods stores. in its first year of operations 2011 the company

User Account

All Pages