a

b

Flint Company is a leading manufacturer of sunglasses. One of Flint's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Flint about purchasing 28,600 pairs of these sunglasses. Flint's unit manufacturing cost, based on a full capacity of 241,000 units, is as follows: Direct materials $6 Direct labor 4 Manufacturing overhead (75% fixed) 24 Total manufacturing costs $34 Flint also incurs selling and administrative expenses of $74,100 plus $2 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Flint's normal price for these sunglasses is $40 per pair. The sporting goods store has offered to pay $34 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid. What would be the effect on Flint's income if the special order were accepted? Flint's income will increase by $ The Blue Spruce Company manufactures 3,700 units of a part that could be purchased from an outside supplier for $16 each. Blue Spruce's costs to manufacture each part are as follows: Direct materials $4 Direct labor 3 Variable manufacturing overhead 6 Fixed manufacturing overhead 10 Total $23 All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses. (a-b) (a) Calculate relevant cost to make. Relevent cost to make $ per unit (b) Should Blue Spruce continue to manufacture the part? (c-d). (c) If Blue Spruce could lease the manufacturing facilities to another company for $23,700 per year, what would be the net total cost to outsource production of the part? Net cost to buy $ (d) Should Blue Spruce outsource production of the part given the opportunity to lease the facilities