Question:

*Please note they are two different exercises. and need to be done in excel with formulas.

Exercise 1

Exercise 13-12Outsourcing decision with qualitative factors

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.

Page 492

Required

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.

Exercise 2

Problem 13-24Effect of order quantity on special order decision

Levy Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Levy made 20,000 blankets during the prior accounting period. The cost of producing the blankets is summarized as follows.

Page 496

Materials cost ($20 per unit 20,000)$400,000

Labor cost ($18 per unit 20,000)360,000

Manufacturing supplies ($3 20,000)60,000

Batch-level costs (20 batches at $4,000 per batch)80,000

Product-level costs160,000

Facility-level costs290,000

Total costs$1,350,000

Cost per unit = $1,350,000 20,000 = $67.50

Required

a.Rios Motels has offered to buy a batch of 500 blankets for $47 each. Levy's normal selling price is $90 per unit. Based on the preceding quantitative data, should Levy accept the special order? Support your answer with appropriate computations.

b.Would your answer to Requirement a change if Rios offered to buy a batch of 1,000 blankets for $56 per unit? Support your answer with appropriate computations.

c.Describe the qualitative factors that Levy Quilting Company should consider before accepting a special order to sell blankets to Rios Motels.