Calculate the increase in company proof

Assignment Help Financial Accounting

Reference no: EM131810588

Glenn Company makes 40,000 motors to be used in the production of its power lawn mowers. The cost per motor at this level of activity is as follows:

direct materials $12.00 direct labor 9.25 variable overhead 5.60 fixed overhead 4.00 total $30.85 The motor has recently become available from an outside supplier for $29 per motor.

If Glenn purchases the motor from the outside supplier, the space that is currently being used to manufacture the motor can be rented out for $30,000 per year.

Assume that 40% of the fixed overhead costs will be eliminated if the motor is purchased from the outside supplier.

Calculate the increase in company proof its if Glenn Company accepts the outside suppliers offer.

Do not use decimals in your answer or type the word increase after your answer.

Reference no: EM131810588

Questions Cloud

What average price change per year : An economist has predicted that for the next 5 years, the U.S. will have an 8% annual inflation rate, followed by 5 years at a 6% inflation rate.

Expected annual inflation rate : If the expected annual inflation rate for the next several years is 6%, what interest rate i should be used in project analysis calculations?

High rate of inflation : A South American country has had a high rate of inflation. Recently, its exchange rate was 15 cruzados per dollar; that is, one dollar will buy 15 cruzados

Determining the fuel consumption : The manufacturer believes that the fuel consumption for its new cars should decline as fuel prices increase to keep the fuel costs constant.

Calculate the increase in company proof : Calculate the increase in company proof its if Glenn Company accepts the outside suppliers offer.

Compute the inflation rate : Compute the inflation rate, f , for the entire 10-year period.

Calculate the selling price per unit charged by the outside : Calculate the selling price per unit charged by the outside supplier that would make Glenn economically indifferent between making and buying the motor.

What rate of return is sally receiving on the loan : After taking inflation into account, what rate of return is Sally receiving on the loan? Compute your answer to the nearest 0.1%.

Determining the real rate of return : You want a real rate of return of 5%, and you estimate inflation will average 6% per year. Should you buy the annuity?

User Account

All Pages