Verizon 11:01 AM * 53% . a s1.lite.msu.edu Eric Christian DelannoyStudent sectio
ID: 2512400 • Letter: V
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Verizon 11:01 AM * 53% . a s1.lite.msu.edu Eric Christian DelannoyStudent section: 001 New Messages Courses Help Logout ACC230, Spring 2018 - Survey of Accounting Concepts Main Menu Contents Grades Course Contents »... » SECOND CHANCE Timer Notes Evaluate Feedback PrintInfo X Company spent $7,800 on an engineering study that revealed that Product A could be manufactured more efficiently. The new process would result in variable cost savings of $0.83 per unit and additional fixed costs of $3,200. Current variable costs per unit are 3.35, and current fixed costs are $10,590. Last year, X Company sold 3,400 units of Product A at a price of $12.70. At what unit sales level would X Company be indifferent between adopting the new process and not adopting it? Submit AnswerTries 0/3 Communication Blocked Send FeedbackExplanation / Answer
As per the chegg's policy I am allowed to answer only the first 4 parts of a question so please don't mind and ask other questions separately.
1. The unit sales level = Additional fixed costs / Per unit savings
= 3200/0.83
= 3856
2. The company will save
= 3000*(13.95-(14.87-3.4)) - 5100 - 2000
= 340
3. No. Of units for being indifferent = (5100+2000)/(13.95-(14.87-3.4))
= 2863
4. Variable costs:
Material: 341000/55000 = 6.2
Labor = 275000/55000 = 5
Overhead = (258500-93500)/55000 = 3
Fixed overhead cost = 93500
Unavoidable cost = 72930
If company makes 58650 units
Costs = 58650*(6.2+5+3)+93500
= 926330
If it is bought, cost = 16.2*(58650) - 80000 + (93500-72930)
= 890700
It will save = 890700-926330
= -35630
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