P11-3.18A student template

P11-3.18A student template -...

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Total manufacturing overhead cost per box of Chap-Off  $1.40  Less fixed portion  0.14 Variable overhead cost per box  $1.26  Direct materials  $3.60  Direct labor  2 Variable manufacturing overhead  1.4 Total variable cost per box  $7.00  Direct materials  $2.70  Direct labor  1.8 Variable manufacturing overhead  1.26 Cost of tube from outside  1.35 Total variable cost per box  $7.11  Cost avoided by purchasing the tubes: Direct materials  $2.70  Direct labor  1.8 Variable manufacturing overhead  1.35 Total costs avoided  $5.85  Cost of purchasing the tubes from the outside  $135,000.00  Cost savings per box by making internally  2 3.  At a volume of 120,000 boxes, the company should buy the tubes. The computations are: Cost of making 120,000 boxes: 120,000 boxes × $1.15 per box  $138,000  Rental cost of equipment  40000 Total cost  $178,000  Cost of buying 120,000 boxes:
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This note was uploaded on 12/17/2011 for the course ECON 101 taught by Professor Chapman during the Spring '11 term at Arcadia University.

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