Extra Credit 3

Extra Credit 3 - 30,000 Total 270,000 ¹150000*$8...

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Part 1: A. B. Relevent cost of buying the crowns is the purchase cost. C. Alternatives Differential Cost Make Buy to make Raw Materials¹ 160,000 - 160,000 65,000 - 65,000 13,000 - 13,000 Supervisor Salary 25,000 - 25,000 Rent 30,000 - 30,000 - 305,000 305,000 Total 293,000 305,000 12,000 ¹(50*2000)+(100*600) ²(25*2600) ³(5*2600) (115*2000)+(125*600) It is more cost effective to continue making the crowns by $12,000 Part 2: A. Yes, by 220,000. *500,000-280,000=220,000 B. C. No relevent costs or benefits are attached to rejecting the order. D. Revenue¹ 1,200,000 Less: Direct Materials² 450,000 Direct Labor³ 150,000 Variable Overhead 300,000
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Unformatted text preview: 30,000 Total 270,000 ¹150000*$8 ²150000*$3 ³150000*$1 150000*$2 ⁴ 3 months*$10000 ⁵ Accepting the order provides the greatest benefit by $270,000 Relevent costs of making the crowns in-house include, direct materials, direct labor, variable overhead, rent, and supervisor's salary. Direct Labor² Variable Overhead³ Purchase Cost ⁴ Relevent costs & benefits of accepting the order include, the sale price of $8,direct materials, direct labor, variable overhead, and the cost of renting the labeling machine. Our operating income would increase by $270,000 Labeling Maching ⁵...
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