Calculate total relevant cost to make and net cost to buy

Assignment Help Managerial Accounting
Reference no: EM133043190

Question - Every year Riverbed Industries manufactures 7,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows:

Direct materials $5.00

Direct labor 11.00

Variable manufacturing overhead 6.00

Fixed manufacturing overhead 10.00

Total $32.00

Ivanhoe, Inc., has offered to sell 7,300 units of part 231 to Riverbed for $34 per unit. If Riverbed accepts Ivanhoe's offer, its freed-up facilities could be used to earn $10,500 in contribution margin by manufacturing part 240. In addition, Riverbed would eliminate 40% of the fixed overhead applied to part 231.

Required -

(a) Calculate total relevant cost to make and net cost to buy.

(b) Should Riverbed accept Ivanhoe's offer?

Reference no: EM133043190

Questions Cloud

Recruitment and selection process of toyota motors : Research and explain the 3 strengths and 3 flaws of the recruitment and selection process of Toyota Motors.
Develop initial interview questions : Develop initial interview questions. Staffing services believes that a half-hour interview will be appropriate, with about 3 minutes per interview question.
What is the firm after-tax component cost of debt : A firm has issued a bond. The bond has a 6% coupon, paid semiannually, a current maturity of 15 years, What is the firm after-tax component cost of debt
Strategic managerial approach for effective management : Develop a strategic managerial approach fir effective management of employee motivation and organisational performance
Calculate total relevant cost to make and net cost to buy : Ivanhoe, Inc., has offered to sell 7,300 units of part 231 to Riverbed for $34 per unit. Calculate total relevant cost to make and net cost to buy
What benefits do labor unions provide employees : Have you ever belonged to a labor union? If so, how did membership benefit you? If not, how do you think that a union could benefit you? Discuss.
What is the total cost per batch : Tasty produces 3,600 cans of product per batch. Setup cost for each batch is $50 and each drink costs $0.50 to produce. What is the total cost per batch
Negative impact of giving feedback towards employees : "Besides, poor reception is also a negative impact of giving feedback towards employees. Some employees may receive the feedback negatively.
What is dollar amount for expendables in the flexible budget : During January, the company budgeted for 2,600 tenant-days, but its actual level of activity was 2,580 tenant-days. What is dollar amount for expendables

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Find and compute the company predetermined overhead rate

Compute the company‘s predetermined overhead rate.Harwood Company is a manufacturing firm that operates ajob-order costing system

  How analysis may be of value future endeavors

How analysis, may be of value to you and your future endeavors. Include specific examples such as a company seeking to increase profits would.

  Determine equipments net present value

Deibel Corporation is considering a project that would require an investment of $63,000. No other cash outflows would be involved. The present value of the cash inflows would be $79,380.

  Prepare schedule of cash collections on accounts receivable

Preparing a Schedule of Cash Collections on Accounts Receivable. Schedule showing the cash expected in payments on accounts receivable in August

  How many units do need to sell to double that profit

Assume that we are manufacturing a product and assume that the sales price, How many units do we need to sell to double that profit to $240,000?

  Develop a plot the data in the order of the dates

Develop a Plot the data in the order of the dates. Lexon Inc. is a large manufacturer of affordable DVD players. Management recently became aware of rising

  Determine scrutinizing the unadjusted trail balance

Determine when you scrutinizing the unadjusted trail balance , which account is to be an error? a credit balance in accounts payable

  What is the amount of dividends lambert inc declared

What is the amount of dividends Lambert inc declared and paid? (net income minus dividends equal the change in retained earnings)

  Determine cost formula that expresses the behaviour of yang

Determine the cost formula that expresses the behaviour of Yang's total costs. Yang Manufacturing makes a product called Yin. The relevant range of operations

  Can give an example of a balance sheet recording

Can you give an example of a balance sheet recording that shows how a short term profits can be detrimental to long term profits?

  What is the target price

Based on potential sales of 500 units per year, a new product has estimated traceable costs of $990k. What is the target price to obtain a 15% profit margin

  Explain why a company with the lower gross margin

Explain why a company with the lower gross margin percentage has the higher inventory turnover ratio.

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