Stainless refrigerator company purchases ice makers and

Assignment Help Accounting Basics

Reference no: EM13600041

Stainless Refrigerator Company purchases ice makers and installs them in its products. The ice makers cost $138 per case, and each case contains 12 ice makers. The supplier recently gave advance notice that the price will rise by 50 percent immediately. Stainless Refrigerator Company has idle equipment that with only a few minor changes could be used to produce similar ice makers.

Cost estimates have been prepared under the assumption that the company could make the product itself. Direct labor required would be 10 minutes per ice maker at a labor rate of $18.00 per hour. Variable overhead would be $4.60 per ice maker. Fixed overhead, which would be incurred under either decision alternative, would be $32.420 a year for depreciation and $234.000 a year for other costs. Production and usage are estimated at 75.00 ice makers a year.

Required

1. Prepare an incremental analysis to determine whether the ice makers should be made within the company or purchased from the outside supplier at the higher price.
2. Compute the variable unit cost to (a) make one ice maker and (b) buy one ice maker.

Reference no: EM13600041

Questions Cloud

Telc has recently started the manufacture of recrobo a : telc has recently started the manufacture of recrobo a three wheeled robot that can scan a home for fires and gas leaks

Which types of business transactions would result in cash : which types of business transactions would result in cash from operating activities? give three examples of

Beverage products llc manufactures metal beverage : beverage products llc manufactures metal beverage containers. the division that manufactures soft-drink beverage cans

If the purpose of the income statement is to report the : if the purpose of the income statement is to report the results of operating activities why is there a section on the

Stainless refrigerator company purchases ice makers and : stainless refrigerator company purchases ice makers and installs them in its products. the ice makers cost 138 per case

Integrative-investment decision holliday manufacturing is : integrative-investment decision holliday manufacturing is considering the replacement of an existing machine. the new

The zaf radiator company uses a normal -cost accounting : the zaf radiator company uses a normal -cost accounting system with a single manufacturing overhead cost pool and

A small inn is purchased for 400000 by paying 20000 down : a small inn is purchased for 400000 by paying 20000 down and taking out a fifteen-year 6 380000 mortgage note from

Calculate the difference between cost of goods manufactured : gravois inc. incurred the following costs during june selling expenses . . . . . . . . . . . . . . . . . . . . . . . .

User Account

All Pages