Financial 8e & Managerial Accounting 3e, WileyPLUS Custom Course for St. Cloud S

Question

Financial 8e & Managerial Accounting 3e, WileyPLUS Custom Course for St. Cloud State Study & Assignment Open Assignment mework Exercise D8-8 The Marigold Company manufactures 1.42 nis prt at could be purchasedt rom an cutside suppler for $14 each, Marigald's corts to mamufacture eaco oar Direct materials Direct labor variable manufacturing overhead 3 Fixed manufacturing overhead 9 $2 Total All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to (a) Calculate relevant cost to make. Relevent cost to make (b) Should Marigold continue to manufacture the part? $18 e the part have no altermative uses per unit Yes LINK TO TEXT

Explanation / Answer

A.) Relevant cost of make = direct materials cost + direct labour cost + variable manufacturing overhead

$2+ $4 +$3= $9 per unit

B.) Yes the company should continue to manufacturing the part because variable manufacturing cost is lower than the purchase price

$9<$14

C.) Net purchase cost if company lease manufacturing facility to another company

Total purchase cost - lease income

1428 units *$14 - $8570

$19992 - $8570 = $11422

D.) Yes , answer will be charged if the company lease the manufacturing facility . Beacuse net purchase cost is less then manufacturing cost . Now it's beneficial to purchase product and lease the manufacturing facility .

$11422< (1428 units *$9)

$11422< $12852

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