differential analysis
Get perfect grades by consistently using www.essayjunction.com. Place your order and get a quality paper today. Take advantage of our current 20% discount by using the coupon code GET20
Order a Similar Paper Order a Different Paper
Wheels, Inc., currently manufactures its own custom rims for automobiles. Management is interested in outsourcing production of these rims to a reputable manufacturing company that can supply the rims for $80 per unit. Wheels, Inc., incurs the following annual production costs to produce 10,000 rims internally.
Save your time - order a paper!
Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines
Order Paper Now|
Per Unit |
Total Annual Cost at 15,000 Units |
|
|
Variable production costs |
$ 20 |
|
|
Direct materials |
$ 10 |
$ 200,000 |
|
Direct labor |
$ 30 |
100,000 |
|
Applied (and actual) factory overhead |
300,000 |
|
|
Fixed production costs |
||
|
Factory building and equipment lease |
70,000 |
|
|
Factory insurance |
50,000 |
|
|
Production supervisor’s salary |
100,000 |
|
|
Total production costs |
$ 825,000 |
If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insurance costs will be eliminated. The production supervisor’s salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Wheels, Inc.
Required:
a. Perform differential analysis using the format presented in Figure 7.2. Assume making the rims internally is Alternative 1, and buying the rims from an outside manufacturer is Alternative 2.
b. Which alternative is best? Explain.
We offer the best essay writing services to students who value great quality at a fair price. Let us exceed your expectations if you need help with this or a different assignment. Get your paper completed by a writing expert today. Nice to meet you! Want 15% OFF your first order? Use Promo Code: FIRST15. Place your order in a few easy steps. It will take you less than 5 minutes. Click one of the buttons below.
Order a Similar Paper Order a Different Paper
