Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $2.50 per machine-hour was based on a cost formula that estimates $217,500 of total manufacturing overhead for an estimated activity level of 87,000 machine-hours. Required: 1. Assume that during the year the company works only 82,000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work in Process accounts: Compute the amount of overhead cost that would be applied to Work in Process for the year and make the entry in your T-accounts. 2A. Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account.

Answers

Answer 1

Question Completion:

Manufacturing Overhead Account

Maintenance     $24,000

Indirect materials  8,300

Indirect labor      82,000

Utilities               36,000

Insurance             7,300

Depreciation     65,000

Total costs   $222,600

Work in Process

Direct materials    $740,000

Direct labor               83,000

Answer:

Harwood Company

1. The amount of overhead cost that would be applied to Work in Process for the year is:

= $205,000.

2. T- Accounts:

Work in Process

Direct materials    $740,000

Direct labor               83,000

Applied overhead  205,000

Manufacturing overhead

Maintenance     $24,000

Indirect materials  8,300

Indirect labor      82,000

Utilities               36,000

Insurance             7,300

Depreciation     65,000

Applied overhead: WIP    $205,000

Underapplied overhead        17,600

Total costs   $222,600   $222,600

2A. The amount of underapplied overhead for the year is:

= $17,600

2B. Manufacturing overhead

Maintenance     $24,000

Indirect materials  8,300

Indirect labor      82,000

Utilities               36,000

Insurance             7,300

Depreciation     65,000

Applied overhead: WIP    $205,000

Underapplied overhead       17,600

Total costs   $222,600   $222,600

Explanation:

a) Data and Calculations:

Predetermined overhead rate per machine-hour = $2.50

Estimated total manufacturing overhead = $217,500

Estimated activity level = 87,000

Actual results from production during the year:

Machine-hours worked = 82,000

Applied overhead costs = $205,000 (82,000 * $2.50)

Total manufacturing costs incurred = $222,600

Underapplied overhead = $17,600


Related Questions

If 2,500 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

Answers

Answer: $14,550

Explanation:

Within a certain activity range, the fixed cost remains the same so in this activity range of $2,200 to $5,000, the fixed overhead cost will remain the same:

= 3 * 3,600 units

= $10,800

Variable overhead costs will vary by units:

= 2,500 * 1.50

= $3,750

Total cost = 10,800 + 3,750

= $14,550

Quasik Corporation will be receiving 300,000 Canadian dollars (C$) in 90 days. Currently, a 90-day call option with an exercise price of $.75 and a premium of $.01 is available. Also, a 90-day put option with an exercise price of $.73 and a premium of $.01 is available. Quasik plans to purchase options to hedge its receivable position. Assuming that the spot rate in 90 days is $.71, what is the net amount received from the currency option hedge

Answers

Answer:

216000

Explanation:

($.73 - $.01) x 300,000

The net amount received from the currency option hedge is $216,000.

What is a call option?

A call option is a contract that grants the option buyer the right to purchase an underlying asset at a particular price and time period.

A call option grants you the right, but not the obligation, to buy a stock at a specified price known as the strike price by a specific date at the expiration of the option.

According to the given question, Quasik intends to hedge its receivable position by purchasing options. Because Quasi will get CAD in the future, it should purchase a put option, or the right to sell.

Put option purchase cost = 0.01 * 300,000

                                           = 3,000

Because the spot rate is $0.71 per CAD after 90 days, Quasik will exercise its option at the rate of $0.73 per USD.

Received amount = 0.73 * 300,000

                             = 219,000

After deducting the cost of purchasing the option, the net amount received is,

= 219,000 - 3,000

= 216,000.

The is $216,000 is the net gain from the currency option hedge.

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Jamie is single. In 2020, she reported $108,000 of taxable income, including a long-term capital gain of $5,800. What is her gross tax liability

Answers

Answer:Jamie's gross tax liability is $19,572.50

Explanation:

Since Jamie is single with taxable income of $108,000 which  includes $5,800 long term capital gain.

Therefore  $102,200 (108,000 -5,800) will be taxed under normal tax rates and $5,800 would be under long term capital gain tax rate.

With regards the 2020 tax schedule,  Since her ordinary income is  $102,200, Jamie falls under 24% rate tax bracket under filing for single status.

qd

Tax liability on ordinary income =$14,382.50 plus 24% of any income you made above $84,200

14,382.50 + 0.24 (102,200 - 84,200)

14,382.50 + 0.24 x 18000

                 = 14,382.50 + 4,320

                 = $18,702.50

Also, according to her income, longterm capital gain tax applicable in 2020 is 15%

Tax on long term capital gain = 5,800 × 0.15

                                              = $870

Jamie's gross tax liability is $18,702.50 + 870 = $19,572.50

What is the end behavior of the graph of the polynomial function f(x)

Answers

Answer:

f(x) approaches infinity as x approaches infinity

Explanation:

Given

[tex]f(x) = 3x^6 + 30x^5+ 75x^4[/tex]

Required

The end behavior of the graph

 We have:

[tex]f(x) = 3x^6 + 30x^5+ 75x^4[/tex]

The above expression implies that:

[tex]f(x) = 3x^6 + 30x^5+ 75x^4[/tex]

The leading coefficient is 3 (3 is positive)

And the degree of the polynomial is 6 (6 is even)

When the leading coefficient is positive and the degree is even;  the end behavior of the function is:

[tex]x \to \infty[/tex]

[tex]f(x) \to \infty[/tex]

Design a plan that can be implemented in your life to become a higher level professional​

Answers

Answer:

become a rapper

Explanation:

The following information pertains to Peak Heights Company:

Income Statement for Current Year

Sales $85,900
Expenses Cost of goods sold $51,675
Depreciation expense 6,700
Salaries expense 11,900 70,275
Net income $15,625

Partial Balance Sheet Current year Prior year
Accounts receivable $9,800 $14,200
Inventory 13,100 9,100
Salaries payable 1,620 870

Required:
Present the operating activities section of the statement of cash flows for Peak Heights Company using the indirect method.

Answers

Answer:

Peak Heights Company

PEAK HEIGHTS COMPANY

Statement of Cash Flows

Operating Activities Section

Net income                                             $15,625

Non-cash flow: Depreciation                    6,700

Changes in working capital:

Accounts receivable                              -$4,400

Inventory                                                   4,000

Salaries payable                                          750

Net cash from operating activities     $22,675

Explanation:

A) Data and Calculations:

Peak Heights Company:

Income Statement for Current Year

Sales                                                        $85,900

Expenses Cost of goods sold $51,675

Depreciation expense                6,700

Salaries expense                       11,900    70,275

Net income                                             $15,625

Partial Balance Sheet   Current year   Prior year    Changes

Accounts receivable         $9,800         $14,200     -$4,400

Inventory                             13,100             9,100         4,000

Salaries payable                  1,620                870            750

Best-Built Construction is run in a very traditional way, with experienced top managers making all the decisions and passing them down to lower levels for implementation. Best-Built can be described as a(n) _____ organization.

Answers

Answer: centralized

Explanation:

Centralized organization can be referred to as a hierarchical decision-making structure whereby decision making are done by at the executive level. Unlike the decentralized organization which has many members in the organization making decisions, the centralized organization typically relies on very few individuals at the top level to make decisions.

Since Best-Built Construction follows the scenario explained above, then it can be referred to as a centralized organization.

The quantity demanded of cereal increased from 1,350 to 1,700 when the price of milk decreased from $2.05 to $1.65. What is the estimated cross-price elasticity of demand for cereal

Answers

Answer:

-1.33

Explanation:

Cross price elasticity of demand measures the responsiveness of quantity demanded of good A to changes in price of good B.

If cross price elasticity of demand is positive, it means that the goods are -substitute goods.

Substitute goods are goods that can be used in place of another good.

If the cross-price elasticity is negative, it means that the goods are complementary goods.

Complementary goods are goods that are consumed together

Cross Price elasticity of demand = percentage change in quantity demanded of good A / percentage change in price of good B

percentage change in quantity demanded of good = (1700/ 1350) - 1 = 0.259

percentage change in price = (1.65 / 2.05) - 1 = -0.195

0.259 / -0.195 = -1.33

The senior marketing executive you have assigned as team leader asks you to stay on as a team consultant until she gets things rolling. She asks your advice on her first course of action. What will you advise her to do

Answers

Answer:

In layman's terms, you suggest a highly skilled communications specialist with exceptional creative abilities. You frequently recommend a sales manager who is known with his or her abilities to provide clear direction and follow action. The project will need individuals who will have the relevant experience in managing others as well as academic specialization in related operations.

Senior marketing executive carries out the companies marketing activities, they advise sales manager to understand the customer's need.

What is the role of senior marketing executive?

The senior marketing executive carries out the marketing activities, plan the strategies to maximize profits and to achieve the target of a company.

When a senior marketing executive act as team lead:they are expected to increase sales and maximize the companies profit. They recommend sale manger to know the customer's expectation and make sales accordingly. You require people in team who have experience in the field and have academic specialization also.

Therefore, the above explanation aptly describes the role of senior marketing executive

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The following data are from the financial statements of the Riverton Company.
Current assets $55,000
Total liabilities $95,000
Total assets 125,000
Net income 18,000
Current liabilities 25,000
Sales 275,000

Answers

Answer:

then what i have to found

Contrary to popular opinion, CEOs of major U.S. companies come from a wide variety of private universities and state universities, not just a handful of well-publicized MBA programs. What does this fact tell you about sources of power and organizational politics

Answers

Answer: Power is earned

Explanation:

The fact that so many influential CEOs come from such a wide array of universities shows that they had to work to get to where they are today and were not simply handed positions because of the university they came from.

It shows that if one wants to succeed in business, their alma mater does not matter. They could be from an Ivy league college or from a state college in Mississippi, what matters is their determination to work hard and gain a good track record that will take them all the way to the top.

A factory wishes to maximize its profit by choosing how many of each of its products to produce every week. The factory cannot produce more than 32 units in total each week. A linear programming problem is formed and the part of the sensitivity report corresponding to this constraint is provided below. If the company could produce 10 more units each week, which of the following can be concluded about the optimal profit?
Nam Final Value Shadow Constraint R.H. Allowable Allowable
Price Side Increase Decrease
Total
Production 32 32 90 15.333 8.667
a. Optimal profit increases by 90.
b. Optimal profit increases by 900.
c. Optimal profit increases by 15.3.
d. Optimal profit increases by 153.3.
e. The impact on optimal profit cannot be determined with the given information.

Answers

Ask Siri to help you and there is the answer

When a shift in ________ occurs, rational expectations hold that its impact on output and employment will only be minimal.

Answers

Answer:

Aggregate demand occurs.

Explanation:

The aggregate demand curve of the AD curve will move to the right and components of the demand like consummation, government, and investment spending on the exports and imports will rise. Macroeconomics states that the curve is vertical over time and people should rationally accept this pattern.

Southwest Airlines wants to raise $20 million to finance the renovation of their corporate offices, and the company wishes to raise the funds through direct finance. Which of the following methods could it use?

a. It could issue $20 million in stocks.
b. It could sell $20 million in bonds.
c. It could borrow $20 million from a bank.
d. It could choose either A or B.

Answers

Answer:

D

Explanation:

Direct finance is when a company or individual borrows money directly from the financial market without the aid of a financial intermediary.

Examples include :

issuing bondsissuing shares

Indirect finance is when a company or individual borrows money through a financial intermediary. for example, borrowing from a bank

The Best Company is reviewing two options for replacing a piece of machinery. The first machine costs $100,230 and has a four-year life. The second machine costs $155,000 and has a six-year life. Neither machine will have a salvage value. The machines will be replaced at the end of their life. What method should be used to determine which machine to purchase?

Answers

Answer:

Equivalent annual cost method

Explanation:

Equivalent annual cost method is a method used to choose between two projects with an unequal life span

The decision rule is to choose the product with the higher Equivalent annual cost

Equivalent annual cost method is better for making this decision because if net present value is used, the project with the higher useful life would be chosen. this does not mean it is more profitable

On April 1, Cyclone Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000. Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the double-declining-balance method

Answers

Answer:First Year  Depreciation= $84,000

Second Year  Deprecation= $78,400

Explanation:

Using Double declining

We have that :

Depreciation value  = Cost - Salvage value

$280,000 - $40,000 =$240,000

Since machine is expected to depreciate for 5 years, Annual depreciation  = 240,000 / 5 years

= $48,000

Annual Depreciation Rate = 48,000 / 240,000 = 20%

Therefore, Double declining  = 20 x 2 = 40%

First Year  Depreciation: from April to December

= 40% x  280,000 x 9/12 months

= $84,000

Second Year  Deprecation:

= 40% x (280,000 - 84,000)

= $78,400

4. You want to take out a fully-amortizing 30-year mortgage. You can afford monthly payments of $600 each. The interest rate is 9%. How much money can you borrow?

Answers

Answer: $74569

Explanation:

Based on the information given in the question, the amount that can be borrowed is explained below:

Present value of annuity will e calculated as:

= 600 × [1-(1+0.09/12)^-(12 ×30)] / (0.09/12)

= 600 × [1-(1+0.0075)^-(360)] / 0.0075

= 600 × 1-(1.0075)^-(360)] / 0.0075

= 600 × [1-0.0678860074] / 0.0075

= 600 × 124.282

= 74569

The amount that can be borrowed is $74569

An investor purchases a 15-year, $1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of interest is 5%, what is the current market value of the bond

Answers

Answer:

Bond Price​= $846.3

Explanation:

Giving the following information:

YTM= 0.05

Maturity= 15*2= 30 semesters

Par value= $1,000

Coupon= $40

To calculate the price of the bond, we need to use the following formula:

Bond Price​= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]

Bond Price​= 40*{[1 - (1.05^-30)] / 0.05} + [1,000 / (1.05^30)]

Bond Price​= 614.90 + 231.38

Bond Price​= $846.3

Kathleen Taylor is a high school student who has been investigating the possibility of mowing lawns for a summer job. She has a couple of friends she thinks she could hire on an hourly basis per job. The equipment, including two new lawnmowers and weedeaters, would cost her $500, and she estimates her cost per lawn, based on the time required to pay her friends to mow an average residential lawn (and not including her own labor) and gas for driving to the jobs and mowing, would be about $14.
a. If she charges customers $30 per lawn, how many lawns would she need to mow to breakeven?
b. Kathleen has 8 weeks available to mow lawns before school starts again, and she estimates that she can get enough customers to mow at least three lawns per day, 6 days per week. How much money can she expect to make over the summer?
c. Kathleen believes she can get more business if she lowers her price per lawn. If she lowers her price to $25 per lawn and increases her number of jobs to four per day (which is about all she can handle anyway), should she make this decision?

Answers

Answer:

Kathleen Taylor

a. The break-even lawns she needs to mow is:

= 31.25 lawns.

b. She can then expect to make $4,320 in Service Revenue and $2,304 in net income.

c. She should not lower her price.

Explanation:

a) Data and Calculations:

Cost of equipment = $500

Cost per lawn = $14

Price per lawn = $30

Contribution per lawn = $16 ($30 - $14)

Break-even point = $500/$16

= 31.25 lawns

Available period = 8 weeks

Number of lawns per day = 3

Working days per week = 6

Number of lawns per week = 18

Number of lawns for the period = 144 (18 * 8)

She can then expect to make $4,320 in Service Revenue and $2,304 in net income.

Number of lawns for the period = 192 (4 * 6 * 8)

Service revenue = $4,800 (192 * $25)

Net income = $2,112 (192 * $11)

In each of the following situations, determine whether the company would be more likely or less likely to benefit from refining its costing system.
1. In bidding for jobs, managers lost bids they expected to win and won bids they expected to lose
2. The company operates in a very competitive industry.
3. The company produces few products, and the products consume resources in a similar manner.
4. The company has very few indirect costs
5. The company produces high volumes of some of its products and low volumes of other products.
6. The company has reengineered its production process but has not changed its accounting system

Answers

Answer and Explanation:

The classification is as follows;

a. When the lost bids could be wins and won bids could be lose so it is most likely

b. When the company operates in the industry i.e. competitive so it is most likely

c. When the company generates less products and products are consumed in same way so it is less likely

d. When the company has less non-direct cost so it is less likely

e. When the company generated the high volume of products and some products are of less volume so it is most likely

f. When the company reengineered the process of the production but not varied the accounting system so it is most likely

A recent study determined that, at the current market price, there is a shortage of widgets in Pleasantville. If the market for widgets is allowed to adjust, the ultimate result will be:

Answers

Answer: b. an increase in price and an increase in the quantity supplied

Explanation:

According to the law of supply and demand, when the supply of a good is low, the price should be high to reflect this scarcity. In this case, the supply of widgets is low, hence the shortage.

If the market was able to freely adjust, the price of widgets would increase to reflect this shortage. When supplies see this increase, they will increase their supply so as to earn more profits.

D.Now, if the inflation rate is 18%, the nominal rate of interest on the CD is 24%, and the interest is not taxable, what is the real interest rate on the CD

Answers

Answer: 6%

Explanation:

Inflation increases prices in an economy and therefore makes a currency weaker because the currency will only be able to buy less than what it was able to.

Inflation therefore affects returns which is why the real returns are the more relevant measure.

The real interest rate accounts for inflation by using the formula:

= Nominal rate - Inflation rate

= 24% - 18%

= 6%

The number of all credit-card holders in the U.S. is IN(a) million card holders and the collective amount of credit card debt that all credit-card holders carry is D(x) billion dollars, x years after 2010. The average credit card debt per card holder at year x is:

Answers

Answer: D(x) / IN(a)

Explanation:

If one wanted to find out the average credit card debt per card holder then the correct formula would be:

= Amount of debt that all credit card holders carry / Number of credit card holders

As the amount of debt that all credit card holders carry is denoted by D(x) and the number of credit card holders is IN(a), the average credit card debt per card holder is:

= D(x) / IN(a)

One of the reasons for recognizing revenue at the time of sale is that the risk of loss due to price decline or destruction of the goods is passed to the buyer.A. True B. False

Answers

Answer: True

Explanation:

Sales refer to transactions which involves the provision of goods and services to the consumer.

Revenue is recognized at the time of sale so the risk of loss due to price decline or destruction of the goods is passed to the buyer.

Therefore, the correct option is true.

A competitive market analysis takes into consideration?

Answers

Answer:

A competitive analysis is the process of identifying your competitors and evaluating their strategies to determine their strengths and weaknesses relative to your own business, product, and service. The goal of the competitive analysis is to gather the intelligence necessary to find a line of attack and develop your go-to-market strategy.

Explanation:

#AnswerForTrees

One of the growers is excited by the price increase caused by the blight because he believes it will increase revenue in this market. As an economics student, you can use elasticities to determine whether this change in price will lead to an increase or decrease in total revenue in this market.Using the midpoint method, the price elasticity of demand for soybeans between the prices of

Answers

Full question attached

Answer:

Not elastic

Explanation:

The formula for demand elasticity= percentage change in quantity/percentage change in price

Therefore demand elasticity = Q2-Q1/Q2+Q1/2/P2-P1/P2+P1/2

Using graph of demand attached

= 12-15/12+15/2/21-15/21+15/2

= -3/27/2/6/36/2

=-2/9/1/3

=-2/3

=-0.67

Elasticity is less than one and so demand is inelastic

According to Laurent, managers in Sweden, Denmark, and Great Britain believe that employees should ________. A. adopt a collectivist mindset B. participate in problem solving C. be "fed" all the answers by their superiors D. not be involved in the decision-making process

Answers

Answer:

B. participate in problem solving

Explanation:

André Laurent published the Cross Cultural Puzzle of International Human Resource Management.

This citation looks at how managers in different cultures interact with their employees based on the prevalent sociological tendencies of the country.

People from different cultures tend to perceive communication differently when they interact in the workplace.

He found that employees for Sweden, Denmark, and Great Britain like to participate in problem solving.

Scenario:
AlphaCo and BetaCo are both mid-sized pharmaceutical companies that employ over a thousand workers. The highest paid employees at each company are the executives and the senior level researchers.
This year, both companies have a raise pool of $5,000,000 - that is, each can raise the total compensation paid to all of its workers by a total of five million dollars.
AlphaCo uses $3,500,000 of its raise pool to increase pay for executives and researchers. Most of the other workers receive small raises, and some receive no raise at all.
BetaCo uses $3,500,000 of its raise pool to give everyone in the firm an equal 5% raise. Some key employees receive a raise of over 5%.
1. Which company will have employees who are, overall, more satisfied? Why?
2. Which company is likely to outperform the other over the next year? Why?

Answers

Answer:

BetaCo  BetaCo

Explanation:

BetaCo raised the salaries of everyone in the company meaning that even those who were not getting paid so much saw their salaries increase. Employees here will feel more appreciated as a result of this financial incentive as opposed to AlphaCo that neglected to cater for all its employees in an equal manner.

BetaCo will outperform AlphaCo over the next year all else equal because motivated employees tend to work harder for a company. In addition, BetaCo increased the salaries of key staff by more than 5%. Those key staff will work harder as a result of this incentive and push the company further than AlphaCo.

Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost, Unit Cost On August 1, Cairle Company's work-in-process inventory consisted of three jobs with the following costs: Job 70 Job 71 Job 72 Direct materials $1,600 $2,000 $850 Direct labor 1,900 1,300 900 Applied overhead 1,425 975 675 During August, four more jobs were started. Information on costs added to the seven jobs during the month is as follows: Job 70 Job 71 Job 72 Job 73 Job 74 Job 75 Job 76
Direct materials $800 $1,235 $3,550 $5,000 $300 $560 $80 Direct labor 1,000 1,400 2,200 1,800 600 860 172
Before the end of August, Jobs 70, 72, 73, and 75 were completed. On August 31, Jobs 72 and 75 were sold.
Required:
1. Calculate the predetermined overhead rate based on direct labor cost.
% of direct labor cost.
2. Calculate the ending balance for each job as of August 31.
Ending Balance
Job 70 $
Job 71 $
Job 72 $
Job 73 $
Job 74 $
Job 75 $
Job 76 $
3. Calculate the ending balance of Work in Process as of August 31.
$
4. Calculate the cost of goods sold for August.
$
5. Assuming that Cairle prices its jobs at cost plus 20 percent, calculate Cairle’s sales revenue for August.

Answers

Answer:

Cairle Company

1. The predetermined overhead rate based on direct labor cost is:

= 75% of direct labor cost.

2. August 31 Ending Balances:

Job 70 $7,475  

Job 71 $7,960

Job 72 $9,825

Job 73 $8,150  

Job 74 $1,350

Job 75 $2,065

Job 76 $384

3. Ending balance of Work in Process, August 31:

= $9,694

4. The cost of goods sold for August = $11,890

5. Sales revenue for August = $14,268

Explanation:

a) Data and Calculations:

Work in process inventory on August 1:

                               Job 70  Job 71  Job 72  Job 73  Job 74  Job 75  Job 76

Direct materials     $1,600  $2,000     $850

Direct labor              1,900     1,300       900

Applied overhead    1,425       975       675

Direct materials       $800   $1,235 $3,550 $5,000   $300     $560     $80

Direct labor              1,000     1,400   2,200     1,800     600       860      172

Applied overhead      750     1,050    1,650     1,350     450       645      129

Total costs            $7,475  $7,960 $9,825   $8,150 $1,350 $2,065   $384

Work in Process:

Job 71 $7,960

Job 74   1,350

Job 76     384

Total  $9,694

Cost of goods sold:

Job 72 $9,825

Job 75 $2,065

Total    $11,890

Sales revenue = $14,268 ($11,890 * 1.20)

Part E14 is used by M Corporation to make one of its products. A total of 19,000 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials $ 4.10 Direct labor $ 8.70 Variable manufacturing overhead $ 9.20 Supervisor's salary $ 4.60 Depreciation of special equipment $ 3.00 Allocated general overhead $ 8.20 An outside supplier has offered to make the part and sell it to the company for $29.50 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part E14 could be used to make more of one of the company's other products, generating an additional segment margin of $31,000 per year for that product. The annual financial advantage (disadvantage) for the company as a result of buying part E14 from the outside supplier should be:

Answers

Answer: ($24100)

Explanation:

The annual financial advantage (disadvantage) for the company goes thus:

The relevant cost to produce will be:

= ($4.10 × 19,000) + ($8.70 × 19,000) + ($9.20 × 19,000) + ($4.60 × 19,000) + $31,000

= $77900 + $165300 + $174800 + $87400 + $31000

= $536,400

The relevant costs to buy will be:

= 19,000 × $29.5

= $560,500

Since the relevant cost to buy is more than the relevant cost to produce, then the financial disadvantage will be:

= $560500 - $536,400

= $24,100

The answer is ($24,100)

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