The company has an offer from duvall valves to produce the

Reference no: EM13567905

Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below:

The company has an offer from Duvall Valves to produce the part for $2,000 per unit and supply 1,000 valves (the number needed in the coming year). If the company accepts this offer and shuts down production of valves, production workers and supervisors will be reassigned to other areas. The equipment cannot be used elsewhere in the company, and it has no market value. However, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $55,000 per year.

What is the incremental savings of buying the valves?

Variable Cost Cost per unit

Direct material	$960
Direct labor	600
Variable overhead	300
Total variable costs	$1,800

Fixed costs
Depreciation of equipment	500
Depreciation of building	300
Supervisory salaries	300
Total fixed costs	1,000
Total cost	$2,800

Reference no: EM13567905

Questions Cloud

Required return for a preferred stock james river 338 : required return for a preferred stock james river 3.38 preferred is selling for 45.25. the preferred dividend is

When a company sells machinery at a price equal to its book : 1.all of the following below are needed for the calculation of straight-line depreciation excepta. units produced.b.

Waterco is a manufacturer of boat parts and has been in : waterco is a manufacturer of boat parts and has been in business only a few years. its board of directors decided to

Issue costs will be 11 of the market value the company pays : belton is issuing a 100 par vlue bond that pays 7 annal interest and matures in 15 years. investors are willing to pay

The company has an offer from duvall valves to produce the : howell corporation produces an executive jet for which it currently manufactures a fuel valve the cost of the valve is

The pervious retained earnings were 780 million how much : statement of retained earnings in its most recent financial statements newhouse inc. reported 50 million of net

Motorcade company has three service departments s1 s2 and : motorcade company has three service departments s1 s2 and s3 and two production departments p1 and p2. the following

This will entail an increase in inventory of 8000 an : you are considering adding a microbrewery onto one of your firms already existing restaurants. this will entail an

What is the corporate tax paid by a firm with taxable : what is the corporate tax paid by a firm with taxable income of 300000 given the following tax tables. 0 - 50000

User Account

All Pages