a. Determine the avoidable cost per unit of making the bike frames, assuming that Solomon is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Solomon outsource the bike frames?
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- Sturdy Bike Company makes the frames used to build its bicycles. During year 2, Sturdy made 20,000 frames; the costs incurred follow. Unit-level materials costs (20,000 units x $35.00) Unit-level labor costs (20,000 units × $42.50) Unit-level overhead costs (20,000 × $10.00) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs Allocated portion of facility-level costs $ 700,000 850,000 200,000 120,000 70,000 290,000 500,000 Total costs $2,730,000 Sturdy has an opportunity to purchase frames for $92.50 each. Additional Information 1. The manufacturing equipment, which originally cost $550,000, has a book value of $450,000, a remaining useful life of four years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $70,000 per year. 2. Sturdy has the opportunity to purchase for $910,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value…Munoz Bike Company makes the frames used to build its bicycles. During year 2, Munoz made 26,000 frames; the costs incurred follow. Unit-level materials costs (26,000 units × $50) Unit-level labor costs (26,000 units × $53) Unit-level overhead costs (26,000 × $9) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs Allocated portion of facility-level costs $1,300,000 1,378,000 234,000 93,000 55,800 380,000 490,000 Total costs $3,930,800 Munoz has an opportunity purchase frames for $114 each. Additional Information 1. The manufacturing equipment, which originally cost $580,000, has a book value of $490,000, a remaining useful life of 4 years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $76,000 per year. 2. Munoz has the opportunity to purchase for $1,020,000 new manufacturing equipment that will have an expected useful life of 4 years and a salvage value of $40,000. This…Adams Bike Company makes the frames used to build its bicycles. During Year 2, Adams made 22,000 frames; the costs incurred follow. Unit-level materials costs (22,000 units x $45) Unit-level labor costs (22,000 units x $50) Unit-level overhead costs (22,000 x $10) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs. Allocated portion of facility-level costs Total costs Adams has an opportunity to purchase frames for $112 each. Additional Information 1. The manufacturing equipment, which originally cost $560,000, has a book value of $490,000, a remaining useful life of four years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $73,000 per year. 2. Adams has the opportunity to purchase for $990,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value of $20,000. This equipment will increase productivity substantially, reducing…
- Rundle Bike Company makes the frames used to build its bicycles. During year 2, Rundle made 23,000 frames; the costs incurred follow. Unit-level materials costs (23,000 units x $50) Unit-level labor costs (23,000 units × $52) Unit-level overhead costs (23,000 × $9) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs Allocated portion of facility-level costs Total costs Rundle has an opportunity to purchase frames for $116 each. Additional Information 1. The manufacturing equipment, which originally cost $560,000, has a book value of $430,000, a remaining useful life of 8 years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $67,000 per year. 2. Rundle has the opportunity to purchase for $990,000 new manufacturing equipment that will have an expected useful life of 4 years and a salvage value of $68,800. This equipment will increase productivity substantially, reducing…Part U16 is used by Mcvean Corporation to make one of its products. A total of 19,500 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direct materials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $ 4.20 $ 8.80 $ 9.30 $ 4.70 $ 3.10 $ 8.30 An outside supplier has offered to make the part and sell it to the company for $29.90 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part U16 could be…Part "Mendes" is used in one of Shawn's products. The company's Accounting Department reports the following costs of producing the 12,000 units of the part that are needed every year. Direct Materials $4.79 Direct labor $1.16 Variable overhead $2.68 Supervisor's salary $3.38 Depreciation of special equipment $2.67 Allocated general overhead $1.54 An outside supplier has offered to make the part and sell it to the company for $14.86 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $5651 of these allocated general overhead costs would be avoided. What would be the impact on total net income if Shawn accepted the supplier's offer? Round only your final answer to the nearest…
- Vernon Bike Company makes the frames used to build its bicycles. During Year 2, Vernon made 22,000 frames; the costs incurred follow. Unit - level materials costs (22,000 units \times $48) $ 1,056, 000 Unit - level labor costs (22,000 units \times $53) 1, 166,000 Unit - level overhead costs (22,000 \times $ 12) 264,000 Depreciation on manufacturing equipment 99,000 Bike frame production supervisor's salary 75, 800 Inventory holding costs 289,000 Allocated portion of facility - level costs 580,000 Total costs $ 3,529,800 Vernon has an opportunity to purchase frames for $110 each. Additional Information The manufacturing equipment, which originally cost $500,000, has a book value of $450,000, a remaining useful life of four years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $78, 000 per year. Vernon has the opportunity to purchase for $960,000 new manufacturing equipment that will have an expected useful life of four years and a…Complete this question by entering your answers in the tabs below. Required A Required B Which alternative should the company choose? The total cost of the "make" alternative is by Therefore, the company should the part.Part S51 is used in one of Haberkorn Corporation's products. The company makes 12,000 units of this part each year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials Direct labor Variable manufacturing overhead Supervisor's salary Depreciation of special equipment Allocated general overhead $6.30 $5.70 $4.80 $7.00 $8.60 $7.20 An outside supplier has offered to produce this part and sell it to the company for $37.70 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $17,000 of these allocated general overhead costs would be avoided. The annual financial advantage (disadvantage) for the…
- Part U67 is used in one of Broce Corporation's products. The company's Accounting Department reports the following costs of producing the 16,400 units of the part that are needed every year. Per Unit Direct materials $ 3.60 Direct labor $ 4.30 Variable overhead $ 7.30 Supervisor's salary $ 8.00 Depreciation of special equipment $ 8.60 Allocated general overhead $ 5.60 An outside supplier has offered to make the part and sell it to the company for $32.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $22,400 of these allocated general overhead costs would be avoided. Required: a. Prepare a report that shows the financial impact of buying part…esc Chain Reaction, Inc. allocates overhead using machine hours as the allocation activity. The following information was estimated at the beginning of the year: $300,000 of Estimated Manufacturing Overhead 10,000 Estimated Machine Hours 20,000 Estimated Direct Labor Hours During the year, it took 2,000 machine hours and 6,000 direct labor hours to produce the mountain bikes. How much manufacturing overhead was allocated to the mountain bikes during the year? Click Save and Submit to save and submit. Click Save All Answers to save all answers. 1 Q A 2 W S #3 E D $ 4 R % dlo L 5 F MacBook Pro T < 6 G & Y 7 H * 00 8 U J gPenagos Corporation is presently making part Z43 that is used in one of its products. A total of 5,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity Per Unit Skipped Direct materials $1.10 Direct labor $3.10 Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead $6.90 $5.80 $5.20 $5.60 An outside supplier has offered to produce and sell the part to the company for $20.80 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avolded. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $4,000 of these allocated general overhead costs would be avoided. If management decides to…