Triton, Inc. has a contract to provide 200,000 face shields over the next two years. Triton, Inc.
Question:
Triton, Inc. has a contract to provide 200,000 face shields over the next two years. Triton, Inc. could make themasks in St. Louis or purchase them from an overseas supplier.
a) To make theshields in St. Louis would require direct materials cost of $1.50 pershield and direct labor costs of $2.00 pershield. In addition, overhead cost 50% of the direct labor costs and there would be annual fixed costs of $30,000. What is the total cost per shield for making these in St. Louis?
b) Alternatively, Triton, Inc. could purchase theshields from an overseas supplier for a price still to be negotiated. Using the overseas supplier will incur shipping and handling charges of $0.25 per shield, administrative costs of $40,000 per year, and there is a tariff equal to 30% of the price (and the price is still to be negotiated). What would be the price per shield paid by Triton, Inc. that would result in a total cost per shield of $4.00?