Upon further investigation golden found that they could

Assignment Help Accounting Basics

Reference no: EM13583321

Golden Reed Company is considering outsourcing one its parts. Golden requires 30,000 of the parts per year. The part has the following costs.

Direct materials	$1.00
Direct labor	$2.00
Fixed manufacturing overhead	$3.50
Unit product cost	$6.50

An outside supplier has offered to make the part for $6.00. The fixed manufacturing overhead that is avoidable is $3.00.

a. How much of the unit product cost is relevant to the decision to make or buy the part?

b. Should Golden accept the offer? Explain your answer.

c. Upon further investigation Golden found that they could rent the facility used to make the part for $15,000 per year. How will this new information affect the decision to make or buy the part?

Reference no: EM13583321

Questions Cloud

The difference between the profit margin controllable by a : the difference between the profit margin controllable by a segment manager and the segment profit margin is caused by

You are the new marketing manager for a firm that produces : you are the new marketing manager for a firm that produces a line of athletic shoes to be targeted to the college

Tom is looking at an investment that will pay tom 1000 per : shulas 347 grill has budgeted the following costs for a month in which 1600 steak dinners will be produced and sold

For example you could describe policies before and after : as the new manager of human resources you remember that during the interview process your boss the chief executive

Upon further investigation golden found that they could : golden reed company is considering outsourcing one its parts. golden requires 30000 of the parts per year. the part has

Advantage inc produces two products a and b last year the : advantage inc. produces two products a and b. last year the overhead costs were allocated based on machine hours. this

Discuss the levels of the court through which the case : religion and politics have traditional been highly debated topics in our society. recently the pledge of allegiance has

A solution transmittance is 35 at 260 nm what will the : a solution transmittance is 35 at 260 nm. what will the solution absorbance be if you dilute 25.0 ml of the solution to

Assume the chocolate clusters are not dropped and the : a candy company makes chocolate and peanut clusters which produced the following results last

User Account

All Pages