Gibbs company purchases sails and produces sailboats it

Reference no: EM13482980

Gibbs Company purchases sails and produces sailboats. It currently produces 1,258 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Gibbs purchases sails at $270.00 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $95.60 for direct materials, $82.00 for direct labor, and $100 for overhead. The $100 overhead is based on $78,400 of annual fixed overhead that is allocated using normal capacity. The president of Gibbs has come to you for advice. "It would cost me $277.60 to make the sails," she says, "but only $270.00 to buy them. Should I continue buying them, or have I missed something?"

Reference no: EM13482980

Questions Cloud

Flamingo company sold 1000000 of 8 10-year bonds at 103 on : flamingo company sold 1000000 of 8 10-year bonds at 103 on january 1 2014. the bonds were dated january 1 2014 and pay

What role to you feel the taxation of business entities : what role to you feel the taxation of business entities should play in supporting the revenue needs social and economic

Imagine a startup company of your own and briefly trace its : imagine a startup company of your own and briefly trace its development from a sole proprietorship to a major

Determine which items should be included in a statement of : presented below are selected financial statement items for rowe corporation for december 31 2012.inventory55000cash

Gibbs company purchases sails and produces sailboats it : gibbs company purchases sails and produces sailboats. it currently produces 1258 sailboats per year operating at normal

However one of these customers subsequently made a payment : supreme sales company which sells only on account had a 100000 balance in its accounts receivable and a 4000 balance in

Given the following information how much was transferred to : 1. managerial accountinga. focuses primarily on reporting to regulatory agenciesb. is governed by generally accepted

Inventory purchase budget using the sales-managerrsquos : inventory purchase budget using the sales-managers estimate 1st 2nd 3rd 4th sales 380000 310000 280.000 480000 cost of

Merchandise with an invoice price of 2000 was purchased on : merchandise with an invoice price of 2000 was purchased on october 3 terms 115 n60. the company uses the net method to

User Account

All Pages