combination for the firm. OBJECTIVE Problem 8-57 Make or Buy, Qualitative Considerations Hetrick Dentistry Services operates in a large metropolitan area.Carrently, Hetrick has its own dental laboratory to produce porcelain and gold crowns. The unit costs to produce the crowns are as foows Porcelain Gold $130 27 s 70 27 Direct labor Variable overhead Fixed owerhead Tocal $187 - Fixed overhead is detailed as follows Salary (supervisor) 5,000 32,000 Rent (lab facility) Chapter 8 Tactical Decision Making and Relevant Analysis 445 Overhead is applied on the basis of direct labor hours. These rates were compated by using 5.500 direct labor hoars Alocal dental laboratory has offered to supply Hetrick all the crowns it needs, les price is 125 for porcelain crowns and $150 for gold crowns; however, the offer is conditional on sup- plying both types of crowns-it will not supply just one type for the price indicated. If the offer is accepted, the equipment used by Hetrick's laboratory would be scrapped (it is old and has no market value), and the lab facility would be closed Hetrick uses 2,000 porcelain crowns and 600 gold crowns per year Required: L. CONCEPTUAL CONNECTION Should Hetrick continuc to make its own crowns or should they be parchased from the extermal supplier? What is the dollar effect of purchasing CONCEPTUAL CONNEION What qualitative factors should Hetrick consider in making this decision 3 CONCEPTUAL CONNECTION Suppose that the lab facility is owned rather than rented and that the $32,000 is depreciation racher chan rent. What effect does this have on the analysis in Requirement 1 CONCEPTUAL CONNECTION Refer to the original data. Assume chat the volume of crowns used is 4.200 porcelain and 600 gold. Should Hetrick make or buy the crowns Explain the outcome combination for the firm. OBJECTIVE Problem 8-57 Make or Buy, Qualitative Considerations Hetrick Dentistry Services operates in a large metropolitan area.Carrently, Hetrick has its own dental laboratory to produce porcelain and gold crowns. The unit costs to produce the crowns are as foows Porcelain Gold $130 27 s 70 27 Direct labor Variable overhead Fixed owerhead Tocal $187 - Fixed overhead is detailed as follows Salary (supervisor) 5,000 32,000 Rent (lab facility) Chapter 8 Tactical Decision Making and Relevant Analysis 445 Overhead is applied on the basis of direct labor hours. These rates were compated by using 5.500 direct labor hoars Alocal dental laboratory has offered to supply Hetrick all the crowns it needs, les price is 125 for porcelain crowns and $150 for gold crowns; however, the offer is conditional on sup- plying both types of crowns-it will not supply just one type for the price indicated. If the offer is accepted, the equipment used by Hetrick's laboratory would be scrapped (it is old and has no market value), and the lab facility would be closed Hetrick uses 2,000 porcelain crowns and 600 gold crowns per year Required: L. CONCEPTUAL CONNECTION Should Hetrick continuc to make its own crowns or should they be parchased from the extermal supplier? What is the dollar effect of purchasing CONCEPTUAL CONNEION What qualitative factors should Hetrick consider in making this decision 3 CONCEPTUAL CONNECTION Suppose that the lab facility is owned rather than rented and that the $32,000 is depreciation racher chan rent. What effect does this have on the analysis in Requirement 1 CONCEPTUAL CONNECTION Refer to the original data. Assume chat the volume of crowns used is 4.200 porcelain and 600 gold. Should Hetrick make or buy the crowns Explain the outcome