Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $6.50 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Annual fixed costs Variable cost per switch Required: Machine A Machine B $ 812,150 $ 1,112,775 2.11 0.95 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 260,000 switches per year and what is the total cost of that alternative? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? (Do not round intermediate calculations.) Minimum number of switches Machine A Machine B

Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $6.50 per switch. Vista's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Annual fixed costs Variable cost per switch Required: Machine A Machine B $ 812,150 $ 1,112,775 2.11 0.95 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 260,000 switches per year and what is the total cost of that alternative? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? (Do not round intermediate calculations.) Minimum number of switches Machine A Machine B

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 16E

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