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Social Media in Stakeholder Management

In: Social Issues

Submitted By okano123
Words 523
Pages 3
Accounting
Name:
Institution:

Accounting
Question 1: Outsourcing
Incremental cost to buy 75,000 components ($ 207*75,000) = $15,525,000 Incremental manufacturing savings if bought:
Direct materials (75,000 x $100.80) $7,560,000 Direct labor (75,000 x 10/60 hrs) $12,500
Fixed Overhead $234,000
Variable overhead $345,000
Depreciation $32,420
Total Incremental savings = $8,183,920 Incremental cost of buying components = ($7,341,080)
Cans inc. should continue to produce the components in-house . This is because there is an additional cost of $7,341,080 if cans inc. buys the components.
Cans inc should consider that Increases in costs are bad choices in decision making because the cost must be passed on to the customer or absorbed by it as lower profits.

Question 2: special order
The fixed overhead costs are unavoidable
Therefore, Variable cost = $9.20 + $4.00 + $3.80 = $17.00 per unit

Incremental revenue from special order (2,000 x $21) $42,000
Incremental cost to fill special order (2,000 x $17) (34,000)
Incremental income from accepting special order $ 8,000
Sports R should accept the special offer because there is an Incremental income of $ 8,000 from accepting special order .

Question 3: segment profitability
The allocated fixed costs are unavoidable
Incremental revenue ($220,000) Incremental costs:
Variable costs savings 180,000
Direct fixed costs savings 150,000 $330,000
Incremental increase in profits if...

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