Solution-What is the oppoutunity cost of making instead of

What is the oppoutunity cost of making instead of buying

Assignment Help Cost Accounting

Reference no: EM13554896

Royal Company manufactures 26,000 units of part R-3 each year for use on its production line. At this level of activity, the cost per unit for part R-3 is: Direct material - $4.90 ; Direct Labor - $7 ; Varialble Manufacturing overhead - $ 3.00 ; Fixed Manufacturing overhead - $15 ; total cost per part - $ 29.90.

An outside supplier has offered to sell 26,000 units of part R-3 each year to Royal Company for $49.50 per part. If Royal Company accepts this offer, the facilities now being used to manufacture part R-3 could be rented to another company at an annual rental of $780,600. However, Royal Company has determined that $10 of the fixed manufacturing overhead being applied to part R-3 would continue even if part R-3 were purchased from the outside supplier.

Total Relevant cost of making 26000 units = $1,298,000
Total relevant cost of buying the product (26000 units) = $1,287,000

What is the oppoutunity cost of making instead of buying?

How much would the profit increase by if the outside suppliers offer is accepted ?

Reference no: EM13554896

Questions Cloud

Multiple-step income statement and compute the gross profit : Prepare a multiple-step income statement and compute the gross profit rate.

Describe sodium thiosulfate is a good reducing agent : Because molecular bromine is a strong and toxic oxidant, excess bromine is neutralized. Addition of the aqueous sodium thiosulfate is used for that reason. Sodium thiosulfate is a good reducing agent and converts molecular bromine to sodium bromid..

Determine how far the boat moves : Two people (one having a mass of 40 kg and the other having a mass of 60 kg) stand at one end of a small uniform boat of mass 100 kg and length 20 m. Determine how far the boat moves in the process assuming no friction between the boat and the wate..

Two racing boats set out from the same dock and speed : Two racing boats set out from the same dock and speed away at thesame constant speed of 80.9 km/h for half an hour (0.500 h), theblue boat headed 29.2° south of west, and the green boat headed39.6° south of west.

What is the oppoutunity cost of making instead of buying : What is the oppoutunity cost of making instead of buying and how much would the profit increase by if the outside suppliers offer is accepted?

Evaluate the molarity of 1.00 l of bromine solution : The bromination solution is prepared by mixing liquid bromine with glacial acetic acid 1:4 v/v (bromine to acid). The density of bromine is 3.12 g/mL. Calculate the molarity of 1.00 L of bromine solution.

What percentage of water vapor molecules have : Consider water vapor, H2O, at 26 °C. What percentage of water vapor molecules have a speed within 1 m/s of the most probable speed

The electric potential is to be zero at the origin : A charge of 23.0 μC is located at (4.40 m, 6.22 m), and a charge of -15.0 μC is located at ( - 4.50m, 6.75m). What charge must be located at (2.23m, - 3.31m) if the electric potential is to be zero at the origin?

Describe cobalt iodide : You find a reagent bottle that is labeled with "vanadium (III) nitrate hydrate" and it contains a chalky looking powder. Do you believe the label? Why or why not?

User Account

All Pages

What is the oppoutunity cost of making instead of buying

Reference no: EM13554896

Reference no: EM13554896

Questions Cloud

Reviews

Write a Review

Cost Accounting Questions & Answers

Cost accounting assignment

Prepare the journal entries

Advise as to the liability of all the parties

Prepare revenues budget

Effect of exchange rate changes on cash and cash

Corporate governance

Cost-benefit analysis

Non-annual interest rates and annuities

Job costing in service organizations

Accounting for bad debt expense

Accounting and partnership problems

Development of relevant cash flows

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT