Question: Daisuke Corporation which makes and sells 85 000 radios annually currently

Daisuke Corporation, which makes and sells 85,000 radios annually, currently purchases the radio speakers it uses for $5 each. Each radio uses one speaker. The company has idle capacity and is considering the possibility of making the speakers that it needs. Daisuke estimates that the cost of materials and labor needed to make speakers would be a total of $4.50 for each speaker. In addition, supervisory salaries, rent, and other manufacturing costs would be $89,000. Allocated facility-level costs would be $50,000.

a. Determine the change in net income Daisuke would experience if it decides to make the speakers.
b. Discuss the qualitative factors that Daisuke should consider.

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  • CreatedFebruary 07, 2014
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