Bulan Inc Makes a Range of Products

question 149

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: 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?

---

Definitions:

Heterozygous

A genetic condition where an individual has two different alleles of a gene, one inherited from each parent.

Locus

The specific physical location of a gene or DNA sequence on a chromosome, critical for genetic identity and inheritance patterns.

Nondisjunction

The failure of chromosomes to separate properly during cell division, leading to cells with abnormal chromosome numbers.

Point Mutation

A genetic mutation where a single nucleotide base is changed, inserted, or deleted from a sequence of DNA or RNA.