question archive A) Relevant Costs and Alternative Choice Decisions Case 1 Micro Manufacturing Company makes microwave ovens
A) Relevant Costs and Alternative Choice Decisions Case 1 Micro Manufacturing Company makes microwave ovens
Subject:AccountingPrice: Bought3
A) Relevant Costs and Alternative Choice Decisions Case 1 Micro Manufacturing Company makes microwave ovens. The control panel for the YXG-120 model oven is currently manufactured. The manufacturing costs for 5,000 control units made during the accounting period just completed presented below: Total Cost Direct materials Direct labor Manufacturing overhead (70% fixed, 30% variable) Variable administrative Total 120,000 80,000 100,000 20,000 320,000 A supplier has offered to sell Micro Manufacturing the oven control panels at a cost of $54 each. All fixed costs are sunk costs and other costs will remain the same per unit. The company expects to use 5,000 oven control panels in the coming year. Required: 1. Should Micro Manufacturing buy or purchase the oven control panels? If Micro Manufacturing buys the control panels instead of manufacturing them, what would be the effect on net income?
