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2. Prepare an analysis to show which product line to emphase P25-378 Weekenders manufactures wooden decks. The costs to make 1,800 7-ply decks from maple
2. Prepare an analysis to show which product line to emphase P25-378 Weekenders manufactures wooden decks. The costs to make 1,800 7-ply decks from maple wood are: Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing coses for 1.800 decks $17.520 3.100 2,080 6,800 $29,500 Suppose Weekenders can purchase 7-ply decks from Lancaster Com- pany for $14 each. Weekenders would pay $1 per unit to transport the decks to its manufacturing plant, where it would add its own logo at a cost of $0.50 per deck. Requirements 1. Weekenders's accountants predict that purchasing the decks from Lancaster would enable the company to avoid $2,200 of fixed over- head. Prepare an analysis to show whether Weekenders should make or buy the decks. (pp. 1259-1261) 2. The facilities freed by purchasing decks from Lancaster can be used to manufacture another product that will contribute $3,100 to profit. Total fixed costs will be the same as if Weekenders had produced the decks. Show which alternative makes the best use of Weekenders's facilities: (a) make decks, (b) buy decks and leave facilities idle, or (e) buy decks and make the other product. (p. 1261)
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