Bulan IncMakes a Range of Products

question 45

Essay

Bulan Inc.makes a range of products.The company's predetermined overhead rate is $20 per direct labor-hour,which was calculated using the following budgeted data:

Component T6 is used in one of the company's products.The unit product cost of the component according to the company's cost accounting system is determined as follows:
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An outside supplier has offered to supply component T6 for $101 each.The outside supplier is known for quality and reliability.Assume that direct labor is a variable cost,variable manufacturing overhead is really driven by direct labor-hours,and total fixed manufacturing overhead would not be affected by this decision.Bulan chronically has idle capacity.
Required:
Is the offer from the outside supplier financially attractive? Why?

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Definitions:

Emergent Norm Theory

A sociological theory proposing that in situations of uncertainty or without clear societal norms, new norms emerge collectively as individuals respond to the situation.

Symbolic Interactionist

A perspective in sociology that focuses on the meanings individuals assign to objects, events, and behaviors, and how these meanings shape social interactions and identities.

Anti-social Behaviours

Actions that harm or lack consideration for the well-being of others and disrupt the social order.

Emotionally Driven Goal

A goal or objective that is pursued primarily due to one's feelings or emotions rather than logical or practical reasons.