Question the knott division of wright corporation produces

Assignment Help Financial Accounting

Reference no: EM13350222

Question :

The Knott Division of Wright corporation produces rope. One-third of the Knott Division's output is sold to the Hammock Products division of Wright and the remainder is sold to outside customers. The Knott Division's evaluated sales and standard cost data for the fiscal year ending Sept. 30 are as given:

Hammock Products Outside Customers

Sales $17,500 $40,000

Variable Costs (10,000) (20,000)

Fixed Costs (3,000) (6,000)

Gross Margin 4,500 $14,000

Unit Sales 10,000 20,000

The Knott Division has an opportunity to buy 10,000 feet of identical quality rope from an outside supplier at a cost of $1.50 per unit on a continuing basis. Suppose that the Knott Division can't sell any additional product to outside customers.

Should Wright allow its Knott Division to buy the rope from the outside supplier, and why?

a. Yes, because buying the rope could save Wright Company $2,500

b. No, because making the rope could save Wright Company $2,500.

c. Yes, because buying the rope could save Wright Company $5,000.

d. No, because making the rope could save Wright Company $5,000

Reference no: EM13350222

Questions Cloud

Auditing and assuranceyou are required to identify a : auditing and assuranceyou are required to identify a current controversy relating to auditors independence. websites

Assessment task critical review the decision making of a : assessment task critical review the decision making of a failed major constructionproperty project within the uk in the

Question independence is taken the cornerstone of the : question independence is taken the cornerstone of the accounting profession. in relation to the audit the auditor could

Question bottle-up inc was organized on 8th january 2001 : question bottle-up inc. was organized on 8th january 2001 and made its s election on 24th january 2000. the required

Question the knott division of wright corporation produces : question the knott division of wright corporation produces rope. one-third of the knott divisions output is sold to

Question wilkens company wants to evaluate the cost : question wilkens company wants to evaluate the cost behavior pattern of maintenance costs. wilkens has decided to use

Question company applies overhead costs to products at a : question company applies overhead costs to products at a rate of 50 of direct labor costs. the subsequent data relate

Question the chinese teapot company manufactures ceramic : question the chinese teapot company manufactures ceramic and plastic teapots. the companys western plant has changed

Problem 1effect of accrued interest on financial : problem 1effect of accrued interest on financial statementsnorman co. borrowed 15000 from the local bank on 1st april

User Account

All Pages