How much will alan save or lose, Cost Accounting

Assignment Help:

 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 case
B Lose $0.20 per case
C Lose $0.80 per case
D Save $0.20 per case


Related Discussions:- How much will alan save or lose

Allocation of overhead costs, Allocation of Overhead Costs Allocation ...

Allocation of Overhead Costs Allocation of overheads is the term utilized where the overhead cost item can be charged to a exact cost center without the requirement for any es

Find the breakeven discount rate, The government of a small South Pacific i...

The government of a small South Pacific island is considering whether to allow development of a small but valuable deposit of phosphate rock. Not having the resources to develop an

Standard cost card, Standard Cost Card It is a card record of the Stan...

Standard Cost Card It is a card record of the Standard or expected costs in producing a specified output.  This gives the physical quantities of inputs and also their monetary

Features of effective cost center framework, Features of Effective Cost Cen...

Features of Effective Cost Center Framework During the establishing cost centers, an organization must consider the given points as: a) Clear definition about the cost cent

Difference between expenses and expenditure, The difference among expenses ...

The difference among expenses and expenditure. Expense is the outflow from a profit oriented organization whereas expenditure is the outflow from non-profit organization.

What are fixed costs, The costs that are fixed irrespective of manufacture ...

The costs that are fixed irrespective of manufacture are fixed costs. EX: Rent, Depreciation. Fix cost is those cost who not alter in any time whether the production done or not

Storing and issuing materials, what is the equivalent unit for materials? i...

what is the equivalent unit for materials? if the cost of normal lots units are absorbed by the units transferred out to the next department the work in process- beginning (60% com

explain your calculation of relevant net cash flows, Polycorp Limited Stee...

Polycorp Limited Steel Division is considering a proposal to purchase a new machine to manufacture a new product for a potential three year contract.  The new machine will cost $1

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd