Solutions chapter 14 - $6 Machine hours equired per unit 1...

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DATA INPUT Overhead cost per machine hour $16 Fixed Manufacturing overhead $10 Machine Hours Limit 50,000 Blender Electric Mixer Direct Material $6 $11 Direct Labor $4 $9 Manufacturing overhead $16 $32 Cost if purchased from outside supplier $20 $38 Annual Demand (units) 20,000 28,000 SOLUTION 1. Blender Electric Mixer Unit cost if purchased from outside supplier $20 $38 Incremental cost if manufactured: Direct Material $6 $11 Direct Labor $4 $9 Variable overhead $16 - $10 per hour fixed $6 $- $32 - (2)($10 per hour fixed) $- $12 Total $16 $32 Unit cost savings if manufactured $4
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Unformatted text preview: $6 Machine hours equired per unit 1 2 Cost savings per machine hour if manufactured $4 / 1 hour $4 $6 / 2 hour $3 ( Therefore each machine hour devoted to the production of Blender saves the company more than a machine hour devoted to Electric Mixer production Machine hours available 50,000 Machine Hours needed to manufacture 20000 Blenders 20,000 Remaining machine hours 30,000 Number of Electric Mixers to be produced 15,000 Conclusion: Manufacture 20,000 blenders Manufacture 15,000 mixers Purchase- blenders Purchase 13,000 mixers...
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