Ask Experts Questions for FREE Help !
Ask
    Mr Baddington's Avatar
    Mr Baddington Posts: 1, Reputation: 1
    New Member
     
    #1

    Apr 28, 2019, 08:07 AM
    Carley company produces 2000 parts per year which are being used in the assembly of o
    carley company produces 2000 parts per year which are being used in the assembly of one of its products. The variable cost of manufacturing each part is $64 and the fixed manufacturing cost total $34 per unit for a total product cost of $100. The part can be purchased from an outside supplier at $80 per unit. If the part is purchased from the outside supplier two-thirds of the fixed manufacturing costs can be eliminated. Which cost are relevant to this decision? Why? What would be the annual impact on the company’s net operating income to be a result of buying the part from the outside supplier?
    ma0641's Avatar
    ma0641 Posts: 15,681, Reputation: 1012
    Uber Member
     
    #2

    Apr 28, 2019, 05:25 PM
    Homework? We don't do it for you. What have you figured out?
    Specter1's Avatar
    Specter1 Posts: 85, Reputation: 2
    Junior Member
     
    #3

    Aug 19, 2019, 06:39 AM
    "carley company produces 2000 parts per year which are being used in the assembly of one of its products. The variable cost of manufacturing each part is $64 and the fixed manufacturing cost total $34 per unit for a total product cost of $100. The part can be purchased from an outside supplier at $80 per unit. If the part is purchased from the outside supplier two-thirds of the fixed manufacturing costs can be eliminated. Which cost are relevant to this decision? Why? What would be the annual impact on the company’s net operating income to be a result of buying the part from the outside supplier?"

    A reduction of 2/3 of the $34 fixed price comes to $11.33 plus $80 for parts from the outside supplier equals $91.33 per unit compared to $100. Using the outside supplier will save $8.67 per unit. Consideration needs to be given to whether the outside supplier can guarantee on-time delivery and the price otherwise your assembly line is sitting idle while orders pile up.

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

The Hoover Dam produces electricity which powers parts of Nevada and California. It I [ 2 Answers ]

I need help finding the answer to the question

Q1) ABC Ltd. Produces room coolers. The company is considering whether it should con [ 3 Answers ]

Q2) Usha Company produces three consumer products : P, Q and R. The management of the company wants to determine the most profitable mix. The cost accountant has supplied the following data. Usha Company : Sales and Cost Data Description Product Total P Q R Material Cost per unit ...

Parts of a showerhead assembly [ 5 Answers ]

What valves and other parts does one need to buy to install a showerhead and handle(s) in a new shower?


View more questions Search