Please help me with this one too! Thanks!! Pottery Ranch Inc. has been manufactu

Question

Please help me with this one too! Thanks!!

Pottery Ranch Inc. has been manufacturing its own finials or its curtain rods. The company s currently operating at 100% of capac t, and ana le manufacturing overhead S charged to production at the rate of 60% o direct labor cost. The direct mater als and direct labor cost per uritto make a pair of nlasare S3 94 and $490, respective -Normal production is 26,600 curtain rods per year. A supplier offers to make a pair of finials at a price of $13.24 per unit. If Pottery Ranch accepts the supplier's offer, all variable manufacturing costs will be eliminated, but the $42,600 of fixed manufacturing overhead currently being charged to the finials will have to be absorbed by other products. ages t he amais the Prepare an incremental analysis to decide if Pottery Ranch should buy the finials. (Round answers to 0 decimal places, e.g. 1250. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Make Buy Direct materials Direct labor Variable overhead costs Fixed manufacturing costs Purchase price Total annual cost

Explanation / Answer

a) Prepare incremental analysis

b) Pottery Ranch should make the finials

c) in answer is c pottery ranch should buy the finials

net income would increase by 4500

Make Buy Net income increase (decrease) Direct material 104804 104804 Direct labour 130340 130340 Variable manufacturing overhead 78204 78204 Fixed manufacturing overhead 42600 42600 None Purchase cost 352184 -352184 Total annual cost 355948 394784 -38836

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.