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Category > Accounting Posted 17 Aug 2017 My Price 11.00

hatner Manufacturing Company

The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called CISCO, is a component of the companyAc€?cs finished product.

   The following information was collected from the accounting records and production data for the year ending December 31, 2014.

1. 7,900 units of CISCO were produced in the Machining Department.
2. Variable manufacturing costs applicable to the production of each CISCO unit were:
    direct materials $5.22, direct labor $4.23, indirect labor $0.48, utilities $0.39.
3. Fixed manufacturing costs applicable to the production of CISCO were:
Cost Item   Direct   Allocated  
Depreciation   $2,030   $930    
Property taxes   540   460    
Insurance   920   620    
    $3,490   $2,010    

All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Allocated costs will have to be absorbed by other production departments.

4. The lowest quotation for 7,900 CISCO units from a supplier is $82,021.
5. If CISCO units are purchased, freight and inspection costs would be $0.35 per unit, and receiving costs totaling $1,270 per year would be incurred by the Machining Department.
 

Collapse question part

(a)

Prepare an incremental analysis for CISCO. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
    Make CISCO   Buy CISCO   Net Income
Increase
(Decrease)
 
Direct material   $   $   $  
Direct labor        
Indirect labor        
Utilities        
Depreciation        
Property taxes        
Insurance        
Purchase price        
Freight and inspection        
Receiving costs        
   Total annual cost   $   $   $

 

Answers

(5)
Status NEW Posted 17 Aug 2017 07:08 PM My Price 11.00

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