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Prepare the company's cash budget for November in good form. Make
sure to indicate what borrowing, if any, would be needed to attain the
desired ending cash balance(Points : 25) Question 5.5. (TCO F) The
following overhead data are for a department of a large company.
Actual Costs Incurred Static Budget
Activity level (in units) 360 340
Variable costs:
Indirect materials $4,182 $4,148
Electricity $2,536 $2,414
Fixed costs:
Administration $6,540 $6,500
Rent $6,310 $6,400
Required: Construct a flexible budget performance report that would be
useful in assessing how well costs were controlled in this department.
(Points : 25)
Question 6.6. (TCO H) McMullen Co. uses 10,000 units of Part X
each year as a component in the assembly of one of its products. The
company is presently producing Part X internally at a total cost of
$125,000 as follows.
Direct materials $40,000
Direct labor 30,000
Variable manufacturing overhead 25,000
Fixed manufacturing overhead 30,000
Total costs $125,000
An outside supplier has offered to provide Part X at a price of $10 per
unit. If McMullen stops producing the part internally, one third of the
fixed manufacturing overhead would be eliminated.
Required: Prepare a make-or-buy analysis showing the annual advantage
or disadvantage of accepting the outside supplier's offer. Please state
clearly whether the part should be made or bought and share your work.
(Points : 30)