pX Company spent $5,900 on an engineering study that revcaled that Product A cou
ID: 2509833 • Letter: P
Question
pX Company spent $5,900 on an engineering study that revcaled that Product A could be manufactured more efficiently. new process would result in variable cost savings of $0.81 per unit and additional fixed costs of $3,710. Current variable costs per unit are 3.31, and current fixed costs are $10,450. Last year, X Company sold 4,200 units of Product A at a price $12.96. At what unit sales level would X Company be indifferent between adopting the new process and not adopting it? 1. AO 4580 BO 5,176 cO s89 DO 60 EO 7,68 FO 8,439 Questions 2 and 3 refer to the following information: X Company is considering buying a part next year that they currently make. This year's per-unit production costs for 3,500 units were: Materials Direct labor (all variable] Variable overhead Fixed overhead Total production costs $2.70 x 3goo 3.54 4.40 $13.94 A company has offered to supply this part for $12.95 per unit. If X Company buys the part, $5,775 of the fixed overhead can be avoided. Also if X Company buys the part, it can use the freed-up resources to increase production of another product, resulting in additional contribution margin of $2,300. Production next year is also expected to be 3,500 units. S po I X Company continues to make the part instead of buying it, t will sasve 8 pts. At what production level would X Company be indiferent between making and buying the part? 3. AO 1,897 BO 2,144 CO 2,423 DO 2,738 EO 3094 FO 3,46 8 pt X Company is coasidring buying a part next year that they eurrently make. A compary has offered to supply this part $18.69 per unit. This year's total production costs for 51,000 units were $357,000 270,300 321,300 $948,600 Materials Direct labor [all variable Total overhead Total production costs Of the total overbead costs, $96,900 were fixed, and $77,520 of these fixed overhead costs were unavoidable. If X Company buys the part, the resources that were used for production can be rented out for $70,000. Production next year is expected to increase to 54,200 units. If X Company continues to make the part instead of buying it, it will save 4. AO $12.743 BO $18,478 CO $26,793 DO $38,850 EO56,332 FO $81,682Explanation / Answer
Solution for Question 1
Unit sales level for cost indifference = $3,710/$0.81 = 6,317 units= 4580 Unit
As per chegg only first question is allowed .
Cost indifference point = differential fixed cost/differential variable cost per unit Differential fixed cost = additional fixed cost of new process= $3710 Differential variable cost per unit = savings in variable cost of adopting new process = $0.81 per unitUnit sales level for cost indifference = $3,710/$0.81 = 6,317 units= 4580 Unit
As per chegg only first question is allowed .
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