What is the maximum purchase price

Assignment Help Accounting Basics

Reference no: EM131821585

Question: Ms. Jane Kim, Purchasing Manager of Kuantan ATV, Inc., is negotiating a contract to buy 20,000 units of a common component part from a supplier. Ms. Kim has done a preliminary cost analysis on manufacturing the part in-house and concluded that she would need to invest $50,000 in capital equipment and incur a variable cost of $25 per unit to manufacture the part in-house. Assuming the total fixed cost to draft a contract with her supplier is $1,000, what is the maximum purchase price that she should negotiate with her supplier? What other factors should she negotiate with the suppliers?

Reference no: EM131821585

Questions Cloud

Do you feel workers compensation favors the employee : Do you feel Workers' Compensation favors the Employee or the Employer? Do you think it should be the only option for employees injured on the job

Calculate monthly mortgage payment based : Use the following information to calculate the mortgage payment at the end. Calculate monthly mortgage payment based on: PMT (monthly)

Difference in restricted-use reports and general-use reports : Explain the difference between restricted-use reports and general-use reports.

What is the profit-leverage effect on profits before taxes : If a firm is able to sustain the same level of operations in terms of sales and administrative expenses but reduces its materials cost by $50,000.

What is the maximum purchase price : Ms. Jane Kim, Purchasing Manager of Kuantan ATV, Inc., is negotiating a contract to buy 20,000 units of a common component part from a supplier.

Determine whether the firm should make or buy the item : Assuming that cost is the only criterion, use break-even analysis to determine whether the firm should make or buy the item.

Has the controller properly reported the bank overdraft : Has the controller properly reported the bank overdraft? What factors should be considered in reporting this item

Compute the allocations of costs to each division : Allocation of Central Costs The Cheeta Bus Company allocates all central corporate overhead costs to its divisions.

What is the effective annual rate-annual percentage yield : You plan to apply for a loan from Bank of America. What is the effective annual rate, or annual percentage yield of this loan.

User Account

All Pages