Problem 6 chapman company

# Problem 6 chapman company - Problem 3- Chapman Company...

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Problem 3- Chapman Company manufactures widgets. Embree Company has approached Chapman with a proposal to sell the company widgets at a price of \$100,000 for 50,000 units. Chapman is currently making these components in its own factory. The following costs are associated with this part of the process when 50,000 units are produced: Direct material \$44,000 Direct labor 20,000 Manufacturing overhead 60,000 Total \$124,000 The manufacturing overhead consists of \$32,000 of costs that will be eliminated if the components are no longer produced by Chapman. The remaining manufacturing overhead will continue whether or not Chapman makes the components. From Chapman’s point of view, what is the amount of avoidable costs if it buys rather than makes the components? \$44,000 + \$20,000 + \$32,000 = \$96,000 Problem 10 - Evans Corporation currently manufactures 3,000 subassemblies annually for its main product. The costs per unit are as follows: Direct materials \$ 3.00 Direct labor

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## This note was uploaded on 05/31/2011 for the course ACCT 502 taught by Professor Rivera during the Spring '11 term at UPR Bayamon.

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Problem 6 chapman company - Problem 3- Chapman Company...

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