MAY I HAVE HELP WITH THE RED X\'s PLEASE?? I AM NOT SURE WHAT I AM DOING WRONG 1
ID: 2473226 • Letter: M
Question
MAY I HAVE HELP WITH THE RED X's PLEASE?? I AM NOT SURE WHAT I AM DOING WRONG
1. Matchless Computer Company has been purchasing carrying cases for its portable computers at a delivered cost of $58 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 42% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows:
Direct materials
$27.00
Direct labor
17.00
Factory overhead (42% of direct labor)
7.14
Total cost per unit
$51.14
If Matchless Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs.
2. Sell or Process Further
Zing Roast Coffee Company produces Columbian coffee in batches of 6,100 pounds. The standard quantity of materials required in the process is 6,100 pounds, which cost $6.00 per pound. Columbian coffee can be sold without further processing for $9.40 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $10.00 per pound. The processing into Decaf Columbian requires additional processing costs of $9,250 per batch. The additional processing will also cause a 6% loss of product due to evaporation.
3.
Decision on Accepting Additional Business
Country Jeans Co. has an annual plant capacity of 63,200 units, and current production is 43,300 units. Monthly fixed costs are $39,500, and variable costs are $25 per unit. The present selling price is $37 per unit. On February 2, 2014, the company received an offer from Miller Company for 13,500 units of the product at $28 each. Miller Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Country Jeans Co.
Direct materials
$27.00
Direct labor
17.00
Factory overhead (42% of direct labor)
7.14
Total cost per unit
$51.14
Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) October 11, 2014 Make Carrying Case (Alternative 1) Buy Carrying Case (Alternative 2) Differential Effect on Income (Alternative 2) Costs: Purchase price Direct materials per unit Direct labor per unit Variable factory overhead per unit Fixed factory overhead per unit 0 58 58 27 0 27 17 0 17 2.55 0 2.55 7.14 7.14 0 Income (Loss) 53.69 65.14 11.45Explanation / Answer
1.
Make
carrying
case
Buy
Carrying
Case
Differential
Effect on
Income
2.
Table is correct
Price of decaf coloumbian that cause neither an advantage or disadvantage for process further=
(Revenue+contribution needed)/no of pounds
=(57340+20740)/5734
=13.62
3.
Any price above the variable cost of $25 will give the positive contribution margin
*13500×28=378000
**13500×25=337500
Make
carrying
case
Buy
Carrying
Case
Differential
Effect on
Income
Purchase price 0 58 58 Direct material per unit 27 0 -27 Direct labour per unit 17 0 -17 Variable factory overhead 2.55 0 -2.55 Fixed factory overhead 4.59 0 0 Income(loss) 51.14 58 11.45Related Questions
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