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14 12 points Golfers, Inc. (GI) manufactures golf-related equipment including golf balls. This year's expected production of golf balls is 110,000 packs (each consisting of
14 12 points Golfers, Inc. (GI) manufactures golf-related equipment including golf balls. This year's expected production of golf balls is 110,000 packs (each consisting of four golf balls). Cost data are as follows: Product costs directly traceable to balls: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead 02:41:04 General allocated overhead Per Pack 110,000 Packs $2.20 $242,000 0.40 44,000 0.20 22,000 92,400 23,100 $423,500 The full cost of one pack of golf balls is $3.85. Gl has received an offer from an outside supplier to supply any desired quantity of balls at a price of $4.00 per pack of four golf balls. The cost accounting department has provided the following information: a. The direct fixed manufacturing overhead is the cost of leasing the machine that stamps out the balls. The machine can produce a maximum of 500,000 balls per year. If the balls are bought, the machine will no longer be needed. b. No other costs will be affected. Required: 1. Prepare an analysis showing whether GI would be better off making or buying the balls at a projected volume of 110,000 packs (440,000 golf balls). (Round "Per Unit" answers to 2 decimal places.) Purchase Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Common costs allocated to this product line Total costs Per Unit Make 110,000 packs Buy Difference 2-a. At what volume would Gl be indifferent between making and buying? (Do not round intermediate calculations and round your final answer to nearest whole number.) Indifferent point packs
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