Question
Answered step-by-step

Subject: Managerial Accounting Provide the following Requirement:...

Subject: Managerial Accounting

Provide the following Requirement: Show Complete Solution.

Image transcription text

EXERCISE 13-9 Make or Buy a Component [L03] For many years, Diehl Company has produced a small electrical part that it uses in the production of its standard line of diesel tractors. The company's unit product cost for the part, based on a production level of 60,000 parts per year, is as follows: Direct materials ........................... $ 400 Direct labor .............................. 2.?5 Variable manufacturing overhead ............. 0.50 Fixed manufacturing overhead. traceable ....... 3 00 $130,000 Fixed manufacturing ouedwead, common (allocated on the basis of labor-hours) ........ 2.25 $135,000 Unit product cost ........................... $12. An outside supplier has offered to supply the electrical parts to the Diehl Company.r for only $10.00 per part. One-third of the traceable fixed manufacturing cost is supervisory salaries and other costs that can be eliminated if the parts are purchased. The other two-thirds of the traceable fixed manufac- turing costs consist of depreciation of special equipment that has no resale value. Economic deprecia— tion on this equipment is due to obsolescence rather than wear and tear. The decision to buy the parts from the outside supplier would have no effect on the common fixed costs of the company, and the space being used to produce the parts would otherwise be idle. Required: Prepare computations showing how much profits would increase or decrease as a result of purchasing the parts from the outside supplier rather than making them inside the company.

... Show more

Answer & Explanation
Verified Solved by verified expert
Rated Helpful
<p>sque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor</p> Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet

Unlock full access to Course Hero

Explore over 16 million step-by-step answers from our library

Subscribe to view answer
ur laoreet. Nam risus ante, datricess
or nec facilisis. Pellentesque dapibus efficitur laorenecic
s a molestie consequat, ultrices acnec fanec
, dictumat, ulsus

gue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum

Step-by-step explanation

ongue vel laoreet ac, dictum vitae odio. Donec ali

congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui
Student review
100% (1 rating)
Thorough explanation
Easy to follow
Clear formatting