How much profitsprofitsarrow-10x10png will increase or

Reference no: EM13568361

Royal Company manufactures 22,000 units of part R-3 each year for use on its production line. At this level of activity, the cost per unit for part R-3 is:

Direct materials                               $ 5.20
Direct labor    6.00
Variable manufacturing overhead      3.80
Fixed manufacturing overhead         15.00

Total cost per part $ 30.00

An outside supplier has offered to sell 22,000 units of part R-3 each year to Royal Company for $43.50 per part. If Royal Company accepts this offer, the facilities now being used to manufacture part R-3 could be rented to another company at an annual rental of $504,000. However, Royal Company has determined that $10 of the fixed manufacturing overhead being applied to part R-3 would continue even if part R-3 were purchasedpurchasedarrow-10x10.png from the outside supplier.

Required:

a.What is the total relevant cost of making the product? (Omit the "tiny_mce_markerquot; sign in your response.)

Total relevant cost of making the product (22,000 units) $

b. What is the total relevant cost of buying the product? (Omit the "tiny_mce_markerquot; sign in your response.)

Total relevant cost of buying the product (22,000 units) $

c. What is the opportunity cost of making instead of buying? (Omit the "tiny_mce_markerquot; sign in your response.)

Total opportunity cost $

d.How much profitsprofitsarrow-10x10.png will increase or decrease if the outside supplier's offer is accepted? (Input the amount as a positive value. Omit the "tiny_mce_markerquot; sign in your response.)

ProfitsProfitsarrow-10x10.png would by $

Reference no: EM13568361

Questions Cloud

My assignment states that i have to write a letter to the : my assignment states that i have to write a letter to the dean of south university as t why my gpa was below average

Which of the following is not considered a permanent source : 1 which of the following is not considered a permanent source of financing?a. commercial paperb. preferred stockc.

Labeling theorists are adamant about the labels that : labeling theorists are adamant about the labels that offenders are given throughout the criminal justice system. labels

What would be the effect on the companys overall net : the management of thews corporation is considering dropping product e28i. data from the companys accounting system

How much profitsprofitsarrow-10x10png will increase or : royal company manufactures 22000 units of part r-3 each year for use on its production line. at this level of activity

List the arguments variables of which an fx call or put : list the arguments variables of which an fx call or put option model price is a function. how does the call and put

How much would you be willing to pay for a 10-year ordinary : how much would you be willing to pay for a 10-year ordinary annuity if the payments are 500 per year and the rate of

Tina a self-employed computer consultant underreports her : tina a self-employed computer consultant underreports her tax liability for the 2013 tax year. the amount of the

Show how you can realize a guaranteed profit from covered : suppose that the current spot exchange rate is euro1.50pound and the one-year forward exchange rate is euro1.60pound.

User Account

All Pages