104) Swenson Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of  10,000 units of this part are as follows:

Direct materials$ 100,000

Direct labour170,000

Variable factory overhead300,000

Fixed factory overhead  250,000


Of the fixed factory overhead costs, $35,000 is avoidable.


a.Assuming there is no alternative use for the facilities, should Swenson take advantage of an offer from a supplier who is willing to sell Swenson 10,000 units of the same part for $64 per unit?

b.Would your answer to Part (a) change if the facilities could be rented for $50,000 a year?

105) Van Sickle Corporation has a joint process which produces three products, D, E and F. Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year amount to $150,000. Other relevant data are as follows:



Sales ValueCosts afterSales Value

Productat Split-off Split-off    at Completion

D $  42,500$ 11,000$ 52,500




a.Which products should Van Sickle process further?


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