Zorro manufacturing had always made its components in house

Reference no: EM13571169

Zorro Manufacturing had always made its components in house. However, Simpson Components Works had recently offered to supply one component, P7-43, at a price of $5 each. Zorro uses 3,850 units of component P7-43 each year. The absorption cost per unit of this component is as follows:

Direct Materials $1.30
Direct Labor .65
Variable Overhead 2.50
Fixed Overhead 3.00
Total $7.45

The fixed overhead is an allocated expense; none of it would be eliminated if production of component P7-43 stopped.

Required:

a. What are the alternatives facing Zorro Manufacturing with respect to production component P7-43?

b. List the relevant cost for each alternative. Which alternative is better?

Reference no: EM13571169

Questions Cloud

Thirty years later in 1988 the average cost was 13 700 what : in 1958 the average tuition for one year at an ivy league was 1800. thirty years later in 1988 the average cost was 13

Barbara was injured in an automobile accident she has : barbara was injured in an automobile accident. she has threatened to file a suit against the other party involved in

Prepare a research proposal for a correlational research : questionprepare a research proposal for a correlational research study based on the following research topicage and job

Lowe manufacturing co warrants its products for one year : lowe manufacturing co. warrants its products for one year. the estimated product warranty is 4 of sales. assume that

Zorro manufacturing had always made its components in house : zorro manufacturing had always made its components in house. however simpson components works had recently offered to

Classify each of the following items as belonging in the : classify each of the following items as belonging in the revenue expenditure human resourcespayroll production or

It had 20 million of interest expense and itscorporate tax : pearson brothers recentlyreported an ebitda of 7.5 million and net income of 1.8million.nbspit had 2.0 million of

Jack and jill are married this year jack earned 72000 and : jack and jill are married. this year jack earned 72000 and jill earned 80000 and they received 4000 of interest income

If winkler inc has sales of 2 million per year all credit : if winkler inc. has sales of 2 million per year all credit and an average collection period of 35 days what is its

User Account

All Pages