summeronlil D ×, Summer Onlin × D directions tos Xy C Secure https://newconnect.
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summeronlil D ×, Summer Onlin × D directions tos Xy C Secure https://newconnect.mheducation.com/flow/connect.html Final Exam ×YG chegg study a ACC ch16 Easx x Apps i. Dental Imported From Edge Final Exam i Saved Munoz Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging Munoz produces a relatively small amount (19,000 units) of the cream and is considering the purchase of the product from an outside supplier for $5.10 each. If Munoz purchases from the outside supplier, it would continu brand name. Munoz's accountant constructed the following profitability analysis: Help 4 e to sell and distribute the cream under its own Revenue (19,080 units x $12.00) $228,800 Unit-level materials costs (19,099 units x $1.20) Unit-level labor costs (19,00e units x $e.70) Unit-level overhead costs (19,eee x $0.29) Unit-level selling expenses (19,000 x $.4) 8 points (22,880) (13,300) (3,800) (7,600) 180,500 (66,808) (13,286) (46,880) 55, 300 Contribution margin 02:58:49 Skin cream production supervisor's salary Allocated portion of facility-level costs Product-level advertising cost eBook Contribution to companywide income Required a. Identify the cost items relevant to the make-or-outsource decision. b. What is the avoidable cost per unit if the outsourcing decision is taken? Should Munoz continue to make the product or buy it from the supplier? c. Suppose that Munoz is able to increase sales by 6,000 units (sales will increase to 25,000 units). Calculate the total avoidable costs. At this level of production, should Munoz make or buy the cream? Complete this question by entering your answers in the tabs below Required A Required B Required C Identify the cost items relevant to the make-or-outsource declsion. Total avoidable costs McExplanation / Answer
Required - A
Required - B
Total avoidable cost ( per Unit) = 105900 / 19000 = 5.57
We incure a cost of 5.10 in buying the product and at the same time avoide a cost of 5.57, so there is a net saving of 0.47 per unit in buying. Hence buying is recommended.
Required - C
Materials cost 22800 Labor cost 13300 Overhead costs 3800 Production supervisors salary 66000 Total avoidable costs 105900Related Questions
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