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Unformatted text preview: Difference Sales Revenue 72,000 105,000 33,000 less: Variable costs 36,000 90,000 54,000 Contribution Margin 36,000 15,000 (21,000) <---Perfect Direct materials $37 Direct labor $19 Variable manufacturing overhead $13 Fixed manufacturing overhead $22 BWM has idle capacity, and can manufacture the batteries without affecting the manufacture of their motorcyc Make Batteries Buy Batteries Difference Variable Costs Direct Materials 37,000 - 37,000 Direct Labor 19,000 - 19,000 Variable Overhead 13,000 - 13,000 Purchase cost from Supplier 78,000 (78,000) Total Cost of batteries 69,000 78,000 (9,000) So we can see that they would save 9000 to make the batteries themselves. So their Opera Perfect Time Company manufactures and sells watches. Great Products Company has offered Perfect Time $ watches. Perfect Times normal selling price is $36 per watch. The total manufacturing cost per watch is $24, watches....
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This note was uploaded on 09/11/2011 for the course TERM 1 taught by Professor Smith during the Spring '11 term at FIT.
- Spring '11