Would your answer be different in b if the productive

Assignment Help Accounting Basics

Reference no: EM13484861

Schopp Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 60% of direct labor cost. The direct materials and direct labor cost per unit to make the lamp shades are $3.59 and $4.70, respectively. Normal production is 31,600 table lamps per year.
A supplier offers to make the lamp shades at a price of $13.10 per unit. If Schopp Inc. accepts the suppliers offer, all variable manufacturing costs will be eliminated, but the $48,220 of fixed manufacturing overhead currently being charged to the lamp shades will have to be absorbed by other products.

Prepare the incremental analysis for the decision to make or buy the lamp shades.

Should Schopp Inc. buy the lamp shades?

Would your answer be different in (b) if the productive capacity released by not making the lamp shades could be used to produce income of $82,544?

Reference no: EM13484861

Questions Cloud

What is the operating cycle and how is it related to the : what is the operating cycle and how is it related to the cash conversion

Why are revisions of monetary aggregates less of a problem : why are revisions of monetary aggregates less of a problem for measuring long-run movements of the money supply than

What is financial risk how is it related to business : what is financial risk? how is it related to business

Which firms are most likely to use bank financing rather : which firms are most likely to use bank financing rather than to issue bonds or stocks to finance their activities?

Would your answer be different in b if the productive : schopp inc. has been manufacturing its own shades for its table lamps. the company is currently operating at 100 of

Which 1000 bond has the higher yield to maturity a : which 1000 bond has the higher yield to maturity a twenty-years bond selling for 800 with a current yield of 15 or a

What is an original issue discount bond how are such bonds : what is an original issue discount bond? how are such bonds priced and how are their before-tax and after-tax rates of

When can a decline in the value of a countrys currency : when can a decline in the value of a countrys currency exacerbate adverse selection and moral hazard problems?

In 2013 maria who files as a head of household reported : in 2013 maria who files as a head of household reported regular taxable income of 115000. she itemized her deductions

User Account

All Pages