Conversion Trailer Company plans on selling 5,500 units of a particular trailer model. It can either produce the product in house or purchase it from an outside supplier. The relevant costs are as follows:

• Purchase from supplier: $625,000
• Direct materials per unit: $60
• Direct labor per unit: $35
• Variable overhead per unit: $15

Prepare a make-or-buy analysis based on the preceding information.

Question 6

Delight Inc. has the capacity to produce 250,000 units of its product.It only plans on producing 175,000 units this year at a price of $17.00 per unit.Ithas fixed costs of $225,000 and typical unit costs as follows:

• Direct materials per unit:$5.00
• Direct labor per unit:$4.00
• Variable overhead per unit:$3.00
• Fixed overhead per unit:$3.00
• Total cost per unit:$15.00

A customer approaches Delight Inc. with an offer to purchase 60,000 units at $9.00 per unit. Create an accept or reject analysis for this offer.

Question 

Appliance Company currently has three product lines with the following information:

	Basic	Ultra	Superior
Sales	$2,000,000	$1,350,000	$650,000
Variable Expenses	$1,200,000	$600,000	$450,000
Direct Fixed Expenses	$100,000	$125,000	$275,000

Appliance Company will also lose $500,000 in sales of the Ultra Brand (and $250,000 of variable expenses), ifit drops the Superior Brand. Prepare a keep or drop analysis for the Superior Brand.

Answer rating: 100% (QA)

MakeorBuy Analysis for Conversion Trailer Company Option 1 Make InHouse Direct materials per unit 60 ... View the full answer