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KarenSmith KarenSmith
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7 years ago
Refrigerators, Inc. manufacturers refrigerators. The management of Refrigerators, Inc. was approached by Freeze-It Company who manufacture the icemakers that are a part of most refrigerator freezers. Freeze-It proposed to make all the icemakers for Refrigerators, Inc. for $50 a unit. Refrigerators, Inc. currently manufactures 10,000 icemakers at its facility. The cost to manufacture 10,000 ice makers per unit is as follows:
   Direct materials   $30.00
   Direct labor   10.00
   Variable manufacturing overhead   5.00
   Fixed manufacturing overhead     20.00
      Total   $75.00
It appears that purchasing the icemakers is to the company's benefit. Management asked you, the accountant for a more in depth schedule.

REQUIRED:
a.)   Prepare a schedule that shows whether Refrigerators, Inc. should buy the ice makers from Freeze-It, Inc. or continue to make them, if 25% of the fixed cost is directly related to the production of the ice makers.
b.)   Give quantitative and qualitative reasons on why to accept or reject Freeze-Its proposal.
Textbook 
Survey of Accounting: Making Sense of Business

Survey of Accounting: Making Sense of Business


Edition: 1st
Author:
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suryoyosuryoyo
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KarenSmith Author
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#2
7 years ago
Many thanks
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7 years ago
Thanks for the feedback
Thumbs up me, please!
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