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ACCT618 Managerial Accounting

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Question:

In this paper, please discuss the following case study. In doing so, explain your approach to the problem, support your approach with references, and execute your approach. Provide an answer to the case study’s question with a recommendation.

Case Study:

Assume that a firm has prepared the following cost estimates for the manufacture of a sub assembly component based on an annual production of 8,000 units.

 

Per Unit

Total

Direct materials

$5

$40,000

Direct labor

$4

$32,000

Variable factory overhead applied

$4

$32,000

Fixed factory over head applied (150% of direct labor cost)

 

 

$6

 

 

$48,000

Total Cost

$19

$152,000

The supplier has offered to provide the subassembly at a price of $16 each.  Two-thirds of fixed factory overhead, which represents executive salaries, rent, depreciation, and taxes, continue regardless of the decision.  Should the company buy or make the product?

Superior written essays will mention and explain the following elements when responding to the assignment question:

  • Provide a solution and recommended decision.
  • Provide a narrative about the approach to the problem.
  • Provide supporting references.

Be sure to use APA formatting in your paper.  Purdue University’s Online Writing LAB (OWL) is a free website that provides excellent information and resources for understanding and using the APA format and style.

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