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Unformatted text preview: Some practice problems 1: Carter is making an integral part of her exclusive toy when Macon comes along and offers to sell her the part for $110. She is currently making 200,000 of these parts and the cost associated w/ the production is below. If she purchased the part from Macon it would free up space that would allow her to make another toy which would provide her $2,400,000 of additional income. Carter’s cost to make each part: DM $30 DL $20 FMOH Direct $8,000,000 Allocated $2,000,000 Should she accept Macon’s offer and purchase the parts or continue to make them herself? Show your work!!! 2: Sam makes coffee cups which he sells for $6.50 each. A large school w/ a bird with a mascot offers to buy 200,000 mugs for $4.00 each. The “bird” template will cost him a one-time set-up of $25,000. He is not at capacity and has the will cost him a one-time set-up of $25,000....
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- Spring '10
- Financial Accounting, Following, Macon, DL rate variance, DL efficiency variance, overall DL variance