1)Han Products manufactures 24,000 units of part S-6 each year for use on its pr
ID: 2588444 • Letter: 1
Question
1)Han Products manufactures 24,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is:
An outside supplier has offered to sell 24,000 units of part S-6 each year to Han Products for $22 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $74,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier.
Required:
What is the financial advantage (disadvantage) of accepting the outside supplier’s offer?
2)Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $56,000 per ton, one-fourth of which is allocated to product X15. Eight thousand six hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $15 each, or processed further at a total cost of $6,900 and then sold for $21 each.
Required:
1. What is the financial advantage (disadvantage) of further processing product X15?
2. Should product X15 be processed further or sold at the split-off point?
Direct materials $ 3.80 Direct labor 12.00 Variable manufacturing overhead 2.20 Fixed manufacturing overhead 12.00 Total cost per part $ 30.00Explanation / Answer
As per chegg guidelines we answer one question per post. Kindly post remaining questions in next post Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Statementshowing Computations Paticulars Make Buy Differential Direct Materials = 24000*3.80 91,200.00 91,200.00 Direct Labour = 24000*12 288,000.00 288,000.00 Variable manufacturing overhead = 24000*2.20 52,800.00 52,800.00 Purchase cost = 24000*22 528,000.00 (528,000.00) Rental income in case of buy (74,000.00) 74,000.00 Relevant Fixed cost = 24000*12*1/3 96,000.00 96,000.00 Relevat costs 528,000.00 454,000.00 74,000.00 financial advantage of accepting the outside supplier’s offer is $74,000
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