How to compute total cost of making and buying the parts

Assignment Help Accounting Basics
Reference no: EM132583360

Current-Control Inc. manufactures a variety of electrical switches. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a switch to Current-Control for $32 per unit. To evaluate this offer, Current-Control has gathered the following information relating to its own cost of producing the switch internally:

Per Unit12,000 Units

per Year Direct materials$12 $144,000

Direct labour 10 120,000

Variable manufacturing overhead 3 36,000

Fixed manufacturing overhead, traceable 8 96,000

Fixed manufacturing overhead, common, but allocated 16 192,000

Total cost$49 $588,000

  • 25% supervisory salaries; 75% depreciation of special equipment (no resale value).

Required:

Question 1: Assuming that the company has no alternative use for the facilities now being used to produce the switch, compute the total cost of making and buying the parts.

Make Buy

Total cost--12,000 units

Question 2: Suppose that if the switches were purchased, Current-Control could use the freed capacity to launch a new product. The segment margin of the new product would be $78,000 per year. Compute the total cost of making and buying the parts.

Reference no: EM132583360

Questions Cloud

By how much will annual profits be increased or decreased : By how much will annual profits be increased or decreased, If the order is accepted,(The order will not change the company's total fixed costs.)
Describe what would be observed : Explain what was observed with the horizontal motion of the man and the boat in terms of Newton's Laws of Motion.
How companies account for income tax : Briefly explain the recognition criteria of deferred tax assets and deferred tax liability and Identify the deferred tax assets/liabilities that is reported
Define the special issue of unboundedness : Define the special issue of unboundedness in linear programming problem. Define the special issue of redundancy in linear programming
How to compute total cost of making and buying the parts : Current-Control Inc., The segment margin of the new product would be $78,000 per year. Compute the total cost of making and buying the parts.
Explain the importance of information technology : Explain the importance of information technology and how it is driving global business.
What expenses and costs facing today air industry : Evaluate what the current fuel costs do to the industry and how they affect the ticket prices and the patrons' flying occurrences.
Angular velocity of the neutron star : A star with an initial radius of 1.0 x 108 m and a period of 30.0 Earth days collapses suddenly to a radius of 1.0 x 104 m,
Prepare a performance plan to establish the outcomes : Prepare a performance plan to establish the expected outcomes, outputs, key performance indicators (KPIs) and goals for your team

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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