9-13. Managerial Accounting Decisions. In the following vignettes, make a recomm
ID: 2584771 • Letter: 9
Question
9-13. Managerial Accounting Decisions. In the following vignettes, make a recommen dation to your boss-the person described in each situation. And, suggest any other issues your boss should consider beyond the data provided. a. Cleaver Corp. incurs the following annual costs in making one part for its products Total Costs for Prime costs Variable factory overhead Fixed factory overhead 20,000 Units $200,000 200,000 300,000 Haskell Co. offers the same part for $25 per unit. If the parts are purchased from Haskell, plant space currently used by Cleaver for making the parts can be rented for $30,000 a year. Also, $100,000 of fixed factory overhead could be avoided if the part is purchased. Question: Make or buy?Explanation / Answer
9-13) Present costs incurred=200000+200000+300000=700000
If we purchase it then costs incurred=(25*20000)+200000-30000=670000
SO it is better to purchase than produce it as it saves 30000
b)present costs incurred if we produce=60000+40000+70000+50000+30000=250,000
If we purchase then the costs is =(5*40000)+70000+30000=300,000
So it is better to produce than buy
c)If we go for outsider the cost=(25*2000)+5000=55000
If we inhouse hire then costs=40000+12000=52000
It is better to but than make
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