Glister Company - net income Part E Apparently as the cost...

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Part A D.M 20000 D.L Dept  1 30000 D.L Dept  2 6000 FOH  33333 Total cost 89333 Per unit  $       8.93  Overhead  rate 13.33 Part B D.M 20000 D.L Dept  1 30000 D.L Dept  2 6000 FOH  Plant wide 4333 FOH  Dept1 1000 FOH Dept  2 12000 Total cost 73333 Per unit  $       7.33  Overhead  rate Plant wide 3.33 Dept 1 10 Dept 2 10 Part C i 17.33 ii 9.53
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The difference in the bid price is due to difference in allocation method.  However, the more logical is the $9.53 as the allocation has been made based on the resources to be consumed for each activity.  It will also help  in  winning the bid  due to  lower bid  price. Part D Plant wide Dept 1 Dept 2 Total Actual 190000 110000 520000 820000 applied  208333 105000 520000 833333 Under or  over 18333 -5000 0 13333 over under over Total is over applied FOH by 13333, if it is charged to cost of goods sold but not to inventories it will increase the
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Unformatted text preview: net income. Part E Apparently as the cost is lower than $8 offered, it is suggested that the company should produce itself. Part F Additional cost 6700 less increment al profit 15000 Increase in net income 8300 The company can accept the offer of contractor as it will increase the profit by $8300. Part G The issues are the transportation cost, any other cost for import of goods, the lead time of delivery of goods and change in foreign exchange rate to be considered while importing from another country....
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