Should golden company accept the offer

Assignment Help Managerial Accounting
Reference no: EM132956617

Golden Company makes 3,000 units per year of a part called a "glup" for use in one of its products. Data concerning the unit production costs of glup follow:

Direct Materials $35
Direct Labor $10
Variable Manufacturing Overhead $ 8
Fixed Manufacturing Overhead $20
Total Manufacturing Cost per Unit $73

An outside supplier has offered to sell Golden Company all the glups it requires. If Golden decided to discontinue making the glups, 40% of the above fixed manufacturing overhead costs could be avoided. Assume that direct labor is a variable cost.

REQUIRED:

Problem 1. Assume Golden Company has no alternative use for the facilities presently devoted to production of the glups. If the outside supplier offers to sell glups for $65 each, should Golden Company accept the offer? Should the center be closed? Show calculations to support your answer.

Problem 2. Assume that Golden Company could use the facilities presently devoted to production of glups to expand production of another product that would yield an additional contribution margin of $80,000 annually. What is the maximum price Golden Company should be willing to pay the outside supplier for glups?

Reference no: EM132956617

Questions Cloud

Define bench marking : Define bench marking, employee empowerment and value-chain analysis. Use your own application to explain the definition, use examples for each definition.
What is the cost of budgeted purchases of direct materials : 23?% of the next? month's direct materials needed for production. What is the cost of the budgeted purchases of direct materials needed for? January?
Should production manager be penalized for poor performance : Given that the company uses a responsibility accounting system, should the production manager be penalized for poor performance?
Analyse one of commonwealth bank of bank : Firstly, compute the credit spread of this bond, by comparing the yield on this bond with the yield on Treasury Bonds of comparable duration. To simplify your c
Should golden company accept the offer : If the outside supplier offers to sell glups for $65 each, should Golden Company accept the offer? Should the center be closed?
Analyse commonwealth bank of australia shares : -Firstly, provide a graph and comment on the company's stock price changes in the previous three years. Explain what factors have caused the stock price to dev
Industry analysis risk elements : Industry risk/valuation and country risk/valuation- which ones will be most difficult to protect against?
Evaluate the impact the announcement : Some countries encourage movements in their exchange rate relative to those of some other country as a short-term means of addressing foreign trade imbalances.
Is diversification always a good thing to do : Is diversification always a good thing to do? Why or why not?

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

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