4. Sunshine Appliance manufactures a variety of appliances which all use Part B89. Currently, Sunshine Appliance...
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4. Sunshine Appliance manufactures a variety of appliances which all use Part B89. Currently, Sunshine Appliance manufactures Part B89 in its intemal manufacturing process. Sunshine Appliance produces 9,000 units of Part B89 annually. The annual costs to product Part B89 at the level of 9,000 units include: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost $3.00 OM + OL +UMOH $8.00 $4.00 $3.00 S18.00 3 +3 +4 IS per Vait In each scenario below, all of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Nadal Parts Company has offered to sell 9,000 units of Part B89 to Sunshine Appliance for $17.00 per unit. Given these circumstances, what should Sunshine Appliance do in each of the three different scenarios below: A. If Sunshine Appliance has no alternative use for its manufacturing facilities: Should Sunshine Appliance make the part or outsource the part? Make +he part How much per unit will they save by this choice? 2 What is the highest price per unit that Sunshine Appliance should be willing to pay for the part? $15 B. If the facilities currently used to make the part could be rented out to another manufacturer for $27,000 a year: Outsowrce Should Sunshine Appliance make or outsource the part? How much per unit would be saved by this choice? C. If the facilities currently used to make the part could be used to manufacture 9,000 units of another product that would have $6 per unit variable costs, and could be sold for $10 per unit. If no additional fixed costs would be incurred: Should Sunshine Appliance make or outsource the part? How much per unit would be saved by this choice? 4. Sunshine Appliance manufactures a variety of appliances which all use Part B89. Currently, Sunshine Appliance manufactures Part B89 in its intemal manufacturing process. Sunshine Appliance produces 9,000 units of Part B89 annually. The annual costs to product Part B89 at the level of 9,000 units include: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost $3.00 OM + OL +UMOH $8.00 $4.00 $3.00 S18.00 3 +3 +4 IS per Vait In each scenario below, all of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Nadal Parts Company has offered to sell 9,000 units of Part B89 to Sunshine Appliance for $17.00 per unit. Given these circumstances, what should Sunshine Appliance do in each of the three different scenarios below: A. If Sunshine Appliance has no alternative use for its manufacturing facilities: Should Sunshine Appliance make the part or outsource the part? Make +he part How much per unit will they save by this choice? 2 What is the highest price per unit that Sunshine Appliance should be willing to pay for the part? $15 B. If the facilities currently used to make the part could be rented out to another manufacturer for $27,000 a year: Outsowrce Should Sunshine Appliance make or outsource the part? How much per unit would be saved by this choice? C. If the facilities currently used to make the part could be used to manufacture 9,000 units of another product that would have $6 per unit variable costs, and could be sold for $10 per unit. If no additional fixed costs would be incurred: Should Sunshine Appliance make or outsource the part? How much per unit would be saved by this choice?
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Answers B outsource 1 C outsource 2 A B making 27000 7200... View the full answer
Related Book For
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
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