R&R Inc Produces Several Models of Clocks Instructions
Prepare an Incremental Analysis Which Shows the Effect of Has

question 29

Essay

R&R Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for R&R for $270 each. R&R needs 1500 clocks annually. R&R has provided the following unit costs for its commercial clocks: $$\begin{array} { l r } \text { Direct materials } & \$ 100 \\\text { Direct labor } & 110 \\\text { Variable overhead } & 30 \\\text { Fixed overhead (70\% avoidable) } & 150\end{array}$$ Instructions
Prepare an incremental analysis which shows the effect of the make-or-buy decision.

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Definitions:

Marketable Securities

Financial instruments and assets that can be easily translated into cash because they have high liquidity and short maturities.

Accounts Receivable

Money owed to a company by its customers for products or services provided on credit.

Inventory

The total amount of goods or materials a company holds, meant for sale or production.

Acid-Test Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its quick assets.