Award 15 out of 1500 points show my answer exercise 4

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3. Award: 15 out of 15.00 points Show my answer Exercise 4-45 Make-or-Buy Decisions (LO 4-4) Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 2,000 units): Direct materials $ 50 Direct labor 106 Variable overhead 32 Fixed overhead 94 Total $282 Trailblazers has offered to sell the assembly to Mobility for $220 each. The total order would amount to 2,000 rear wheel assemblies per year, which Mobility’s management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers’s offer would eliminate annual fixed overhead of $80,000. Required:
a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) b. Should Mobility make rear wheel assemblies or buy them from Trailblazers?
4. Award: 30 out of 30.00 points Show correct answer Exercise 4-48 Dropping Product Lines (LO 4-4) Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. The company is currently operating at 75 percent of capacity. Worried about the company’s performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company’s total fixed costs would be reduced by 20 percent. Segmented income statements appear as follows: Product Original Strawberry Orange Sales $65,200 $ 85,600 $ 102,40 0 Variable costs 44,000 77,200 80,200 Contribution margin $21,200 $ 8,400 $ 22,200 Fixed costs allocated to each product line 9,400 12,000 14,200 Operating profit (loss) $11,800 $ (3,600)$ 8,000 Required: a. Prepare a differential cost schedule. b. Should Cotrone drop the Strawberry product line?

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