= Homework: Week Three Assignment >> O Question 5, P11-41 (similar to) Part 1 of 6 HW Score: 3.7%, 0.33 of 9 points Points: 0 of 1 Save The Broderick Company produces gas grills. This year's expected production is 15,000 units. Currently, Broderick makes the side burners for its grills. Each grill includes two side burners. Broderick's management accountant reports the following costs for making the 30,000 burners: (Click to view the information.) Broderick has received an offer from an outside vendor to supply any number of burners Broderick requires at $11.00 per burner. The following additional information is available: (Click to view the information) Read the requirements. Requirement 1. Assume that if Broderick purchases the burners from the outside vendor, the facility where the burners are currently made will remain idle. On the basis of financial considerations alone, should Broderick accept the outside vendor's offer at the anticipated volume of 30,000 burners? Show your calculations. (If a box is not used in the table, leave the box empty; do not enter a zero.) Relevant Costs Make Buy Total relevant costs Data table Direct materials Variable direct manufacturing labor Variable manufacturing overhead Inspection, setup, materials handling Machine rent Allocated fixed costs of plant administration, taxes, and insurance Total costs Print Done Cost per Unit Cost for 30,000 Units $ 6.25 $ 187,500 2.40 72,000 0.90 27,000 3,600 5,000 55,000 $ 350,100 - 30,000 burners: More info agen (Click to view the information) a. Inspection, setup, and materials-handling costs vary with the number of batches in which the burners are produced. Broderick produces burners in batch sizes of 1,000 units. Broderick will produce the 30,000 units in 30 batches. b. Broderick rents the machine used to make the burners. If Broderick buys all of its burners from the outside vendor, it does not need to pay rent on this machine. Print Done - Requirements for 1. Assume that if Broderick purchases the burners from the outside vendor, the facility where the burners are currently made will remain idle. On the basis of financial considerations alone, should Broderick accept the outside vendor's offer at the anticipated volume of 30,000 burners? Show your calculations. 2. For this question, assume that if the burners are purchased outside, the facilities where the burners are currently made will be used to upgrade the grills by adding a rotisserie attachment. (Note: Each grill contains two burners and one rotisserie attachment.) As a consequence, the selling price of grills will be raised by $20. The variable cost per unit of the upgrade would be $14, and additional tooling costs of $105,000 would be incurred. On the basis of financial considerations alone, should Broderick make or buy the burners, assuming that 15,000 grills are produced (and sold)? Show your calculations. 3. The sales manager at Broderick is concerned that the estimate of 15,000 grills may be high and believes that only 9,000 grills will be sold. Production will be cut back, freeing up work space. This space can be use to add the rotisserie attachments whether Broderick buys the burners or makes them in-house. At this lower output, Broderick will produce the burners in 18 batches of 1,000 units each. On the basis of financial considerations alone, should Broderick purchase the burners from the outside vendor? Show your calculations. ho D. Print Done