Maximum price bruce would be willing to pay outside supplier

Assignment Help Financial Accounting

Reference no: EM13906741

Bruce Industries manufactures 200,000 components per year. The manufacturing cost of the components was determined as follows.

DL $320,000

VMOH $120,000

FMOH $160,000

An outside supplier has offered to sell the component for $3.40. If Bruce purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented out for $20,000.

a. If Bruce purchases the component from the supplier instead of manufacturing it, the effect on income would be what?

b. What is the maximum price Bruce would be willing to pay the outside supplier?

Reference no: EM13906741

Questions Cloud

The standard cost of a unit of product : A product consists of 2 ounces of oil ($2 per ounce) and 1 ounce of powder ($8 per ounce). Each man hour ($24 per hour) produces 12 units of product. Variable overhead is at $4 per labor hour. Fixed overhead is applied at $8 per labor hour.

Find ratio of gravitational force to electric force : An electron and a positron are separated by distance r. Find the ratio of the gravitational force to the electric force between them. From the result, what can you conclude concerning the forces acting between particles detected in a bubble chambe..

Calculate the indicated ratios for lorzano : Data for Lozano Chip Company and its industry averages follows (answers questions and show work): I was provided with the answers to the question and need the supporting work and formulas. calculate the indicated ratios for Lorzano---answers are: cur..

Calculate the size of principal that must be deposited now : Calculate the size of the principal that must be deposited just now if a terminal sum of £20000 is to be obtained after 10 years when the annual compound rate of interest for the period is 9.9%.

Maximum price bruce would be willing to pay outside supplier : Bruce Industries manufactures 200,000 components per year. An outside supplier has offered to sell the component for $3.40. If Bruce purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented o..

Development of database systems : Prior to the development of database systems, file I/O was how information was stored and retrieved. Give your opinion on what you believe we have gained by using databases. Explain whether or not you believe files had any advantages.

What is the character of the gain : In 2006, TYR Inc. purchased a warehouse for $295,000. This year, the corporation sold the warehouse to Firm D for a cash payment of $80,000 and D’s assumption of a $225,000 mortgage. Through date of sale, TYR claimed $72,000 of straight-line deprecia..

Passes through two processes-mixing and molding : Ralph, Inc. manufactures a product that passes through two processes: mixing and molding. All manufacturing costs are added uniformly in the Mixing Department (i.e., same completion percentage applies to materials and conversion costs). Calculate the..

About the education tax credit : Bernadette, a long time client of yours, is an architect and president of the local Rotary chapter. to keep up-to-date with the latest developments in her profession, she attends continuing education seminars offered by the architecture school at sta..

User Account

All Pages