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Hale Company makes sets of wrenches. They are trying to decide whether to continue to make the case the wrenches are sold in, or to outsource it to another company. The direct material and direct labor cost to produce the cases total $2.00 per case. The overhead cost is $1.00 per case which consists of $0.40 in variable overhead which would all be eliminated if the case were bought from the outside supplier. The $0.60 of fixed overhead is based on expected production of 200,000 cases per year and consists of the salary of the case production manager of $40,000 per year and $80,000 in depreciation on equipment that would have no resale value. The manager would be laid off if the cases were bought externally. Additionally, if the case production were stopped, the space that it is using could be rented out for $20,000 per year. The outside supplier has offered to supply the cases for $2.80 per case. How much will Alan save or lose if the cases are bought externally?A Save $0.40 per caseB Lose $0.20 per caseC Lose $0.80 per caseD Save $0.20 per case
Important Aspect Regarding to Service Cost Centres The basis selected should be one that is judged to be the mainly equitable way of sharing the service costs of department
Material Price Variance (MPV) This may be described as the difference amoung the actual price and the standard price of the materials consumed. MPV = Actual quantity used (S
CONTRIBUTION : It is the variation between the marginal cost of sales and sales and it contributes towards fixed profit and expenses. It is differ from the profit which is the net
A corporation acquired a truck on July 1, 2012, at a cost of $162,000. The truck has a six-year useful life and an estimated salvage value of $18,000. The straight-line method of d
Assumptions of CVP This chapter has given information on how to apply CVP for the business analysis. Most of this analysis is keyed to the model of how profitability is impacte
specimen of cost sheet
What is the major value of the weighted cost of capital calculation for the firm?
KIW Ltd currently orders Material B in batches of 2,500 kgs. Material B is consumed at a steady, known rate over the company's planning horizon of one year. The current usage is 40
Absorption Costing and Marginal Costing Product costs are costs identified along with goods produced or purchased for resale. That costs are initially identified like part of
what are the advantages and disadvantages of marginal costs plus a fixed lump-sum fee?
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