costacctg13_sm_ch11

Sellingprice variablecosts directmaterials

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Unformatted text preview: ($6.50/unit ´ 30,000; 32,000 units) Direct manufacturing labor ($4/unit ´ 30,000; 32,000 units) Plant space rental (or penalty to ter minate) Equipment leasing (or penalty to ter minate) Variable over head (75% of direct ma nufacturing labor) Fixed ma nufacturing over head Total manufacturing or purchasing costs $195,000 120,000 84,000 36,000 90,000 135,000 $660,000 $208,000 128,000 84,000 36,000 96,000 135,000 $687,000 Purchase Costs for 32,000 Units with Porter Estimates (3) $553,600 10,000 5,000 135,000 $703,600 On the basis of Porter’s estimates, Solution Exhibit 11­41A suggests that in 2009, the cost to purchase 32,000 units of MTR­2000 will be $703,600, which is greater than the est imated $687,000 costs to manufacture MTR­2000 in­house. Based solely on these financial results, the 32,000 units of MTR­2000 for 2009 should be manufactured in­house. 2. SOLUTION EXHIBIT 11­41B Manufacturing Costs for 32,000 Units with Hart Estimates (4) Purchasing costs ($17.30/unit ´ 32,000 units) Direct materials ($208,000 ´ 1.08) Direct manufacturing labor ($128,000 ´ 1.05) Plant space rental (or penalt y to terminate) Equipment leasing (or penalt y to terminate) Variable overhead (75% of direct mfg. labor) Fixed manufacturing overhead Total manufacturing or purchasing costs $224,640 134,400 84,000 36,000 100,800 135,000 $714,840 Purchase Costs for 32,000 Units with Hart Estimates (5) $553,600 10,000 3,000 135,000 $701,600 11­37 Based...
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