[Gias Ahmed]

The total cost to buy the component part = 10,000 x $8 = $80,000,
Rental income = $5,000
Cost to buy the component part = $80,000 – $5000 = $75,000.
Compare this with the cost of making 10,000 units component =10,000 x $7 = $70,000.
Additional cost to buy the component = $75,000-$70,000 = $5,000.
Hence the cost will increase by $5,000.

[Gias Ahmed]

The special order will be generating a contribution per unit of
$130 – $80 = $50
As 400 units of the product would be produced ( 200 units for each month).
Total contribution generated by the special order would be 400 x $50 = $20,000.
As the company is utilizing excess capacity , no additional fixed costs are assumed to have been incurred.
Increase in profit would be $20,000.

[Gias Ahmed]

Excess Inventory = 7,000 ending – 5,000 beginning = 2,000 units.
$600,000/300,000 units = $2 x 2,000 units = $4,000.
Therefore variable costing income for the month of April is $36,000 ($40,000 – $4,000 additional expenses).

[Gias Ahmed]

Total cost = $10,000 Beginning + $75,500 Current = $85,500.

Equivalent units = 7,000 Completed + 500 Spoilage + Ending work in process 2,000 @ 80% of 2,500 = 9,500 units.

Allocated cost per equivalent unit = $85,500 ÷ 9,500 = $9.

Cost to be transferred to second production department = 7,000 x $9 Completed + 500 x $9 Spoilage = $63,000 + $4,500 = $67,500.

[Gias Ahmed]

Hello,

Congratulation!! I am just starting my journey and studying FAR. I am requesting you if possible to give me some Idea or share your
experience with me.

Thanks
Gias Ahmed

[Author]

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