The potential for improved control over the availability of

Reference no: EM13570754

Sycamore Company uses a certain part in its manufacturing process that it buys from an outside supplier for $37 per part plus another $4 for shipping and other purchasing-related costs. The company will need 29,300 of these parts in the next year and is considering making the part internally. After performing a capacity analysis, Sycamore determined that it has sufficient unused capacity to manufacture the 29,300 parts but would need to hire a manager at an annual salary of $87,900 to oversee this production activity. Estimated production costs are determined to be:

Direct material

Direct labor

Variable overhead

Fixed overhead (includes manager at $3 per unit)

Total unit cost

(a)	Identify the relevant costs to make this part internally. (Select all that apply.)

rev: 05-11-2011

Historical cost

Direct labor

Direct material

Variable overhead

Fixed overhead

New manager's salary

(c)	What are the other factors that Sycamore Company should consider in deciding to make the part internally? (Select all that apply.)

rev: 05-11-2011

Total sales quantity.

The potential for improved control over the availability of the parts by having it when needed and the potential for improved quality of the parts.

Since Sycamore Company is considering the use of currently available capacity, it should evaluate any relevant opportunity costs of using this capacity for more profitable activities.

Reference no: EM13570754

Questions Cloud

Frances company produces only product a the following : frances company produces only product a. the following information is available selling price per unit 95 variable

Prepare the adjusting entries based on the reconciliation : the bank portion of the bank reconciliation for helene company at november 30 2012 was as follows.helene company bank

As the accounts payable manager you have always been able : as the accounts payable manager you have always been able to negotiate low interest rates when you borrow money to

Visible fences is introducing a new product and has an : visible fences is introducing a new product and has an unexpected change in net operating income of 875000. visible

The potential for improved control over the availability of : sycamore company uses a certain part in its manufacturing process that it buys from an outside supplier for 37 per part

Investor g loeb owns a 5-year 1000 bond with a 5 coupon if : investor g. loeb owns a 5-year 1000 bond with a 5 coupon. if the yield to maturity on similar bonds is currently 10

E-eyescom bank just issued some new preferred stock the : e-eyes.com bank just issued some new preferred stock. the issue will pay an annual dividend of 20 in perpetuity

For each of the following items state whether each would be : for each of the following items state whether each would be recorded as revenue or unearned liability. include

Identify the factors that are relevant in determining the : identify the factors that are relevant in determining the annual depreciation charge and explain whether these factors

User Account

All Pages