3. Now suppose that if Summer purchases CMCBs from Manson, its best alternative use of the capacity currently used for CMCBs is to make and sell special circuit boards (CB3s) to the Eleanor Corporation. Summer estimates the following incremental revenues and costs from CB3s: Total expected incremental future revenues Total expected incremental future costs $1,800,000 $1,950,000 On the basic of financial manaidoration alono ohould Summor malza nabuhan man Total expected incremental future costs $1,950,000 On the basis of financial considerations alone, should Summer make CMCBs or buy them from Manson? Show your calculations. Requirements 1. Calculate the total expected manufacturing cost per unit of making CMCBs in 2018. 2. Suppose the capacity currently used to make CMCBs will become idle if Summer purchases CMCBs from Manson. On the basis of financial considerations alone, should Summer make CMCBs or buy them from Manson? Show your Print Done ed m ng ca Summer manufactured 11,000 CMCBs in 2017 in 55 batches of 200 each. In 2018, Summer anticipates needing 4,000 CMCBs. The CMCBs would be produced in 40 batches of 100 each. The Manson Corporation has approached Summer about supplying CMCBs to Summer in 2018 at $440 per CMCB on whatever delivery schedule Summer wants. uppd onsi o per unit of making CMCBs in 2018. i Data Table Current Costs in 2017 Expected Costs in 2018 165 $ 58 1,400 1,300 Variable manufacturing costs Direct material cost per CMCB Direct manufacturing labor cost per CMCB Variable manufacturing cost per batch for setups, materials handling, and quality control Fixed manufacturing cost Fixed manufacturing overhead costs that can be avoided if CMCBs are not made Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if CMCBs are not made 220,000 320,000 880,000 240,000 (Click the icon to view the make-versus-bu vunner Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the following cost information about the costs of making CMCBs in 2017 and the expected costs in 2018: Click the icon to view the costs.) Read the requirements. 35 Requirement 1. Calculate the total expected manufacturing cost per unit of making CMCBs in 2018. Total Manufacturing Manufacturing Costs of CMCB Cost per Unit Direct materials 640000 160 Direct manufacturing labor 140000 Variable batch manufacturing costs 52000 Fixed manufacturing costs Avoidable fixed manufacturing costs 320000 240000 Unavoidable fixed manufacturing costs 1392000 Total manufacturing costs Requirement 2. Suppose the capacity currently used to make CMCBs will become idle if Summer purchases CMCBs from Manson On the basis of financial considerations alone, should Summer make CMCBs or buy them from Manson? Show your calculations. It a box is not used in the table, leave the box empty; do not enter a zero.) Make Buy Total Per Unit Total Per Unit 160 Purchase cost Direct materials Direct manufacturing labor Variable batch manufacturing costs Avoidable fixed manufacturing costs 640000 140000 52000 320000 1152000 Total relevant costs Requirement 3. Now suppose that if Summer purchases CMCBs from Manson, its best alternative use of the capacity currently used for CMCBs is to make and sell special circuit boards (CB3s) to the Eleanor Corporation. Summer estimates incremental revenues from selling CB3s to be $1,800,000, and incremental costs from making CB3s to be $1,950,000. On the basis of financial considerations alone should Summer make CMCBs or buy them from Manson? Show your calculations. (Complete all answer boxes. For amounts with a so balance make sure to enter "o in the appropriate coll.) Choices for Summer Make CMCBs Buy CMCBs Buy CMCBs and Do Not and Do Not and Make Relevant Items Make CB3s Make CB3S C B3s Total incremental costs of making/buying CMCBs (from requirement 2) Excess of future costs over future revenues from CB3s Total relevant costs Summer will minimize manufacturing costs by making CMCBs and not making CB38 in to the next