Gilberto Company currently manufactures 65,000 units per year of one of its crucial parts. Variable costs are $1.95 per unit, fixed costs related to making this part are $75,000 per year, and allocated fixed costs are $62,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Gilberto is considering buying the part from a supplier for a quoted price of $3.25 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 65,000 and buying 65,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier?
Answers
Answer:
Incremental cost of buying the component = $69,500
Therefore the component shall be make in the company and shall not be bought from outside.
Explanation:
Provided the cost in case of manufacturing
65,000 units
Variable Cost = $1.9565,000 = $126,750
Fixed Cost = $75,000
Total cost of making the product = $126,750 + $75,000 = $201,750
Total cost in case of buying the product
Price to be paid = $3.25 65,000 = $211,250
Also the fixed cost of $60,000 will be incurred in any manner and is not avoidable.
In that case total cost of buying the product = $211,250 + $60,000 = $271,250
Incremental cost of buying the component = $271,250 - $201,750 = $69,500
Therefore the component shall be make in the company and shall not be bought from outside.
Final answer:
If Gilberto Company purchases the part externally, it will incur an extra cost of $12,750. Therefore, it is more cost-effective for the company to continue manufacturing the part in-house.
Explanation:
The first step is to calculate the total cost of producing 65,000 units in-house and the total cost of buying 65,000 units externally.
For in-house production: The cost is the sum of variable costs, fixed costs, and allocated costs, yielding: (65,000 units * $1.95/unit) + $75,000 + $62,000 = $198,500
For external purchasing: the total cost is simply 65,000 units * $3.25/unit = $211,250.
We subtract the in-house cost from the external purchasing cost to obtain the incremental cost: $211,250 - $198,500 = $12,750. Therefore, it costs an incremental $12,750 to buy 65,000 units externally compared to making them in-house. Considering the cost-effectiveness, Gilberto Company should continue to manufacture the parts in-house rather than buying them from the external supplier.
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Identify TWO possible reasons for unemployment.
Answers
Answer:
We first need to find out the present value of each $1,000 bond and then we can figure out how many of these bonds we require to raise $27 million
The n of payments is 15*2 because semi annual payments for 15 years so our N will be 30
The YTM is 7.70/2 because of semi annual payments = 3.85
The Face value is of 1,000 so FV= 1,000
The payments our 1000*0.066=66 divided by 2 because semi annual payments so PMT= 33
We will put these values in a financial calculator to compute the PV of a $1000 bond.
PV= 903
So now we know that the company can get $903 for each $1,000 bond as the bonds present value is 903.
Now in order to find out how many bonds need to be issued to raise 27 million we will divide 27 million by 903, as 903 is the amount we can raise by issuing a single bond.
27,000,000/903=29,900.3 so 29,901
The company will have to issue 29,901 bonds of face value $1,000 to raise $27 million
Explanation:
Answers
Answer:
An unreasonable noncompete clause
Explanation:
A noncompete clause is any provision of a contract that ensures that one party will not compete directly with the other party by starting a similar business or profession that generates competition between them. In the question, there was an example of An unreasonable noncompete clause, which is any clause provided for in a contract that goes beyond the limitations determined to be legally binding, such as the time period and geographic area where an individual cannot to compete.
b. Overstate net income by $38,000.
c. Understate net income by $38,000.
d. Have no effect on net income.
Answers
Answer:
Net profit or net income is overstated by $38000 and option B is the correct answer.
Explanation:
The adjusting entry to be made for accrued and unpaid wages would have been,
Wages expense 38000 Dr
Wages payable 38000 Cr
This entry would record an increase in expenses of $38000 and an increase in liabilities of $38000. As the entry is omitted, the expenses of $38000 are not recorded thus the expenses in income statement are understated. An understatement of expenses means an overstatement of profit by the same amount.
Thus, net profit or net income is overstated by $38000
to quit. Fidelity gives Ron a week to decide whether to
accept. Two days later, Monica signs an employment
contract with Fidelity for another year. The next day,
Monica tells Ron of the new contract. Ron immediately
sends a formal letter of acceptance to Fidelity. Do Fidel-
ity and Ron have a contract? Why or why not? (See Ter-
mination of the Offer.)
Answers
Final answer:
Ron and Fidelity do not have a contract because the initial offer from Fidelity was terminated when Monica decided to stay. Hence, when Ron accepted, there was no standing offer for a contract.
Explanation:
No, Fidelity and Ron do not have a contract. The reason behind this is the concept of offer and acceptance in contract law. In this scenario, Fidelity Corporation’s offer was terminated when Monica decided to stay, making the earlier offer to Ron void since an employment position no longer existed.
When, Monica signed a new contract, Fidelity Corporation's offer to Ron was effectively withdrawn before Ron could accept it. Therefore, when Ron sent a formal letter of acceptance to Fidelity, there was no offer to accept, making the creation of a contract impossible.
The crux of the situation lies in the basic principles of contract formation, which dictate that a valid contract requires an offer, acceptance, and consideration. In this case, the essential element of offer was missing when Ron attempted to accept, thus, barring the formation of a valid contract.
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Answers
Answer:
Sales unit to achieve target profit =6,550 units
Explanation:
Break-even point is the level of activity that achieves no profit or loss. At this level profit is zero because the the total revenue is equal to total cost.
The break-even point is calculated as
Break -even in units = total general fixed cost/(selling price - variable cost)
ley represent tah variable cost per unit with letter "y"
5,000 = 50,000 / (25 - y)
cross multiply
5000× (25 - y) = 50,000
125000 - 5000 y = 50,000
collect like terms
125,000 - 50,000 = 5000 y
75000 = 5,000y
divide both sides by 5,000
y = 75,000/5000 = 15
Variable cost per unit = 15
Sales units to achieve target profit = Fixed cost + target profit/(selling price - variable cost per unit)
Sales unit to achieve target profit
= (50,000 + 15,500)/(25-15)
= 6,550
Sales unit to achieve target profit =6,550 units
Answers
Answer:
$600 unfavorable
Explanation:
The budgeted cost of producing 14,000 units at $5.50 per unit and with fixed costs of $19,400 is:
The variance is given by subtracting the budgeted cost by the actual cost ($97,000):
Since the variance is negative, the variance is unfavorable