Assuming that the company has no alternative use for the

Assignment Help Accounting Basics

Reference no: EM13571687

Climate-Control, Inc., manufactures a variety of heating and air-conditioning units. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a thermostat to Climate-Control for $35 per unit. To evaluate this offer, Climate-Control, Inc., has gathered the following information relating to its own cost of producing the thermostat internally:

	Per Unit		14,900 Units per year
Direct materials	$	9	$	134,100
Direct labor		11		163,900
Variable manufacturing overhead		2		29,800
Fixed manufacturing overhead, traceable		10*		149,000
Fixed manufacturing overhead, common, but allocated		13		193,700

Total cost	$	45	$	670,500

*40% supervisory salaries; 60% depreciation of special equipment (no resale value).

Required:

1a.	Assuming that the company has no alternative use for the facilities now being used to produce the thermostat, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to nearest dollar amount.)

	Make	Buy
Total relevant cost (14,900 units)	$	$

1b.

Should the outside supplier's offer be accepted?

	Reject
	Accept

2a.

Suppose that if the thermostats were purchased, Climate-Control, Inc., could use the freed capacity to launch a new product. The segment margin of the new product would be $142,100 per year. Compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to nearest dollar amount.)

	Make	Buy
Total relevant cost (14,900 units)	$	$

2b.

Should Climate-Control, Inc., accept the offer to buy the thermostats from the outside supplier for $35 each?

	Reject
	Accept

Reference no: EM13571687

Questions Cloud

Lng-term debt of 14200 what is the value of the : building a balance sheet culligan inc. has current assets of 5300 net fixed assets of 26000 current liabilities of

Create a report of 3-5 pages including the following review : deliverable length3-5 pagesapa formatted referencesbecause of recent financial disasters in the news the board of

Prepare the appropriate journal entries through the : the following selected transactions relate to liabilities of united insulation corporation. uniteds fiscal year ends on

Its required returnfor debt rd is 6 its debt-to-total-value : calculating the waccgettys required return for equityre is 18. its required returnfor debt rd is 6 its

Assuming that the company has no alternative use for the : climate-control inc. manufactures a variety of heating and air-conditioning units. the company is currently

Identify and analyze the different moral standards as used : 400 words apa formatted references.while codes of ethics may provide guidelines for employees including accountants

Abc company began operations on june 1 of the current year : abc company began operations on june 1 of the current year. during this time the company produced 370000 units and sod

Calculate each of the different poisson probability for : an office building is being constructed during the summer rainy season. it rains one out of every six days during the 3

You believe that next year the superannuation company will : you believe that next year the superannuation company will pay a dividend of 2 on its common stock. thereafter you

User Account

All Pages