McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 12,000 units of this part are as follows: 36) Direct materials Direct labor Variable factory overhead Fixed factory overhead $86,000 126,000 58,000 138,000 $408,000 Total costs Of the fixed factory overhead costs, $55,000 is avoidable. Conners Company has offered to sell 12,000 units of the same part to McMurphy Corporation for $41 per unit. Assuming there is no other use for the facilities, Schmidt should A) make the part, as this would save $14 per unit B) make the part, as this would save $16 per unit C) buy the part, as this would save the company $192,000 D) buy the part, as this would save $16 per unit
Provenzano Corporation manufactures two products: Product B56Z and Product D32N. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products B56Z and D32N. Activity Cost Pool Activity Measure Total Cost Total Activity Machining Machine-hours $ 330,000 15,000 MHs Machine setups Number of setups $ 50,000 100 setups Product design Number of products $ 88,000 2 products Order size Direct labor-hours $ 280,000 10,000 DLHs Activity Measure Product B56Z Product D32N Machine-hours 6,000 9,000 Number of setups 80 20 Number of products 1 1 Direct labor-hours 6,000 4,000 What is the activity rate for the Machining activity cost pool
