Deeper Beauty (DB) manufactures vanity tables. Management is considering producing the glamor mirrors for their vanity tables rather than continuing to purchase from their current supplier. The supplier charges $35 per mirror.
The cost accounting team has estimated that DB would incur the following costs if they were to produce the mirrors instead:
$\bullet$$20 per mirror for direct materials
$\bullet$$5 per mirror for direct labor
$\bullet$$5 per mirror for variable overhead
$\bullet$$15 per mirror for fixed overhead application.
DB currently has unused production capacity and manufacturing equipment that could be used to manufacture the mirrors. DB has planned to sell 2,500 vanity tables this year.
What would the change in overall cost be for the company if DB produced the mirrors rather than purchasing them?

Question

Deeper Beauty (DB) manufactures vanity tables. Management is considering producing the glamor mirrors for their vanity tables rather than continuing to purchase from their current supplier. The supplier charges $35 per mirror. 
The cost accounting team has estimated that DB would incur the following costs if they were to produce the mirrors instead:
$\bullet$$20 per mirror for direct materials
$\bullet$$5 per mirror for direct labor
$\bullet$$5 per mirror for variable overhead
$\bullet$$15 per mirror for fixed overhead application.
DB currently has unused production capacity and manufacturing equipment that could be used to manufacture the mirrors. DB has planned to sell 2,500 vanity tables this year.
What would the change in overall cost be for the company if DB produced the mirrors rather than purchasing them?

Quizplus · Accepted Answer

The Answer of Deeper Beauty (DB) manufactures vanity tables. Management is considering producing the glamor mirrors for their vanity tables rather than continuing to purchase from their current supplier. The supplier charges $35 per mirror. 
The cost accounting team has estimated that DB would incur the following costs if they were to produce the mirrors instead:
$\bullet$$20 per mirror for direct materials
$\bullet$$5 per mirror for direct labor
$\bullet$$5 per mirror for variable overhead
$\bullet$$15 per mirror for fixed overhead application.
DB currently has unused production capacity and manufacturing equipment that could be used to manufacture the mirrors. DB has planned to sell 2,500 vanity tables this year.
What would the change in overall cost be for the company if DB produced the mirrors rather than purchasing them?

Deeper Beauty (DB) Manufactures Vanity Tables ∙\bullet∙ $20 Per Mirror for Direct Materials

Deeper Beauty (DB) Manufactures Vanity Tables $\bullet$ $20 Per Mirror for Direct Materials