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Category > Accounting Posted 25 May 2017 My Price 6.00

Riggs Company purchases sails and produces sailboats.

Riggs Company purchases sails and produces sailboats. It currently produces 1,250 sailboats per year, operating at normal capacity, which is about 80 % of full capacity. Riggs purchases sails at $ 262 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $ 94.17 for direct materials, $ 84.43 for direct labor, and $ 90 for overhead. The $ 90 overhead includes $ 78,100 of annual fixed overhead that is allocated using normal capacity.

The president of Riggs has come to you for advice. Ac€A?It would cost me $ 268.60 to make the sails,Ac€?? she says, Ac€A?but only $ 262 to buy them. Should I continue buying them, or have I missed something?Ac€??

Prepare a per unit analysis of the differential costs. (Round answers to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

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Alpha Geek
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Status NEW Posted 25 May 2017 12:05 PM My Price 6.00

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Attachments

file 1495715936-Answer.docx preview (234 words )
R-----------igg-----------s C-----------omp-----------any----------- pu-----------rch-----------ase-----------s s-----------ail-----------s a-----------nd -----------pro-----------duc-----------es -----------sai-----------lbo-----------ats-----------. I-----------t c-----------urr-----------ent-----------ly -----------pro-----------duc-----------es -----------1,2-----------50 -----------sai-----------lbo-----------ats----------- pe-----------r y-----------ear-----------, o-----------per-----------ati-----------ng -----------at -----------nor-----------mal----------- ca-----------pac-----------ity-----------, w-----------hic-----------h i-----------s a-----------bou-----------t 8-----------0 %----------- of----------- fu-----------ll -----------cap-----------aci-----------ty.----------- Ri-----------ggs----------- pu-----------rch-----------ase-----------s s-----------ail-----------s a-----------t $----------- 26-----------2 e-----------ach-----------, b-----------ut -----------the----------- co-----------mpa-----------ny -----------is -----------con-----------sid-----------eri-----------ng -----------usi-----------ng -----------the----------- ex-----------ces-----------s c-----------apa-----------cit-----------y t-----------o m-----------anu-----------fac-----------tur-----------e t-----------he -----------sai-----------ls -----------ins-----------tea-----------d. -----------The----------- ma-----------nuf-----------act-----------uri-----------ng -----------cos-----------t p-----------er -----------sai-----------l w-----------oul-----------d b-----------e $----------- 94-----------.17----------- fo-----------r d-----------ire-----------ct -----------mat-----------eri-----------als-----------, $----------- 84-----------.43----------- fo-----------r d-----------ire-----------ct -----------lab-----------or,----------- an-----------d $----------- 90----------- fo-----------r o-----------ver-----------hea-----------d. -----------The----------- $ -----------90 -----------ove-----------rhe-----------ad
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