Make versus buy, activity-based costing. Svenson Corporation manufactures cellular Beart nance modems. It manufactures its own cellular
Question:
Make versus buy, activity-based costing. Svenson Corporation manufactures cellular Beart nance modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of cost per unit, $364.50 the cellular modem. It reports the following cost information about the costs of making CMCBs in 2008 and the expected costs in 2009:
Svenson manufactured 12,000 CMCBs in 2008 in 40 batches of 200 each. In 2009, Svenson anticipates needing 15,000 CMCBs. The CMCBs would be needed in 120 batches of 125 each.
The Minton Corporation has approached Svenson about supplying CMCBs to Svenson in 2009 at $340 per CMCB on whatever delivery schedule Svenson wants.
REQUIRED 1. ae the total expected manufacturing (absorption) cost per unit of making CMCBs in 2009.
2. Suppose the capacity currently used to make CMCBs will become idle if Svenson purchases CMCBs from Minton. Should Svenson make CMCBs or buy them from Minton?
3. Now suppose that, if Svenson purchases CMCBs from Minton, its best alternative use of _ the capacity currently used to make CMCBs is to make and sell special circuit boards (CB3s) to the Essex Corporation. Svenson estimates the following incremental revenues and costs from CB3s:
Should Svenson make CMCBs or buy them from Minton?LO1
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9780135004937
5th Canadian Edition
Authors: Charles T. Horngren, Foster George, Srikand M. Datar, Maureen P. Gowing