Maurice Tutor

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  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 13 Aug 2017 My Price 8.00

Zorro Manufacturing

1. 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?

Answers

Maurice Tutor
(5)
Status NEW Posted 13 Aug 2017 09:08 AM My Price 8.00

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