Tex\'s Manufacturing Company can make 100 units of a necessary component part wi
ID: 2444907 • Letter: T
Question
Tex's Manufacturing Company can make 100 units of a necessary component part with the following costs:
If Tex's Manufacturing Company purchases the component externally, $20,000 of the fixed costs can be avoided. At what external price for the 100 units is the company indifferent between making or buying?
$220,000
$190,000
$200,000
$210,000
Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:
Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:
Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:
Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:
$34,000
$35,000
$38,000
$42,000
What role does a trade-in allowance on old equipment play in a decision to retain or replace equipment?
It is relevant since it reduces the cost of the new equipment.
It is not relevant since it reduces the cost of the old equipment.
It is not relevant to the decision since it does not impact the cost of the new equipment.
It is relevant since it increases the cost of the new equipment.
Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:
Old Machine
New Machine
$59,400
$90,000
$210,000
$300,000
The potential effects of the decision to eliminate a line of business on existing employees and the community are
ignored in incremental analysis.
quantitative factors.
qualitative factors.
opportunity costs.
Direct materials $120,000 Direct labor 25,000 Variable overhead 45,000 Fixed overhead 30,000Explanation / Answer
Part 1
Part2
Variable cost +oputunity Gain =31000+4000 =35000
Part3
It is relevant since it reduces the cost of the new equipment.
A trade-in allowance is the amount of money taken off the sale price in exchange for the item being traded in by the customer
Part 4
Which of the following amounts is relevant to the replacement decision?
Differance between Operating cost ie increamental cost =240000-1806000=50400
Part 5
The potential effects of the decision to eliminate a line of business on existing employees and the community are
qualitative factors.
If he manufactue Total Cost Direct materials 1,20,000 Direct labor 25,000 Variable overhead 45,000 Fixed overhead 30,000 So Point of Indiffernce 220000 Less Fixed Cost 10000 ie 210000 2,20,000 Purchase from outside 2,10,000 Fixed Cost (30000-20000) 10000 Cost of Material 2,20,000Related Questions
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