Assume that if Ward purchases the burners from the outside vendor, the facility where the burners are currently made will remain idle. On the basis of financial considerations alone, should Ward accept the outside vendor's offer at the anticipated volume of 60 comma 000 burners? Show your calculations.
The Ward Company produces gas grills. This year's expected production is 30,000 Ward has received an offer from an outside vendor to supply any number of burners units. Currently, Ward makes the side burners for its grills. Each grill includes two side Ward requires at $9.75 per burner. The following additional information is available: burners. Ward's management accountant reports the following costs for making the (Click to view the information) 60,000 burners: 95 Click to view the information.) Read the requirements. Requirement 1. Assume that if Ward purchases the burners from the outside vendor, the facility where the burners are currently made will remain idle. On the basis of financial considerations alone, should Ward accept the outside vendor's offer at the anticipated volume of 60,000 burners? Show your calculations. (If a box is not used in the table, leave the box empty; do not enter a zero.) Make Buy Total relevant costs On the basis of financial considerations alone, should Ward accept the outside vendor's offer at the anticipated volume of 60,000 burners? Ward accept the outside vendor's offer at the anticipated volume of 60,000 burners. The Ward Company produces gas grills. This year's expected production is 30,000 Ward has received an offer from an outside vendor to supply any number of burners units. Currently, Ward makes the side burners for its grills. Each grill includes two side Ward requires at $9.75 per burner. The following additional information is available: burners. Ward's management accountant reports the following costs for making the i (Click to view the information) 60,000 burners: Click to view the information.) Read the requirements. Requirement 2. For this question, assume that if the burners are purchased outside, the facilities where the burners are currently made will be used to upgrade the grills by adding a rotisserie attachment. (Note: Each grill contains two burners and one rotisserie attachment.) As a consequence, the selling price of grills will be raised by $28. The variable cost per unit of the upgrade would be $21, and additional tooling costs of $75,000 would be incurred. On the basis of financial considerations alone, should Ward make or buy the burners, assuming that 30,000 grills are produced (and sold)? Show your calculations. (Enter any deductions with a parentheses or a minus sign. If a box is not used in the table, leave the box empty; do not enter a zero.) Make Buy Total relevant costs The Ward Company produces gas grills. This year's expected production is 30,000 Ward has received an offer from an outside vendor to supply any number of burners units. Currently, Ward makes the side burners for its grills. Each grill includes two side Ward requires at $9.75 per burner. The following additional information is available: burners. Ward's management accountant reports the following costs for making the i (Click to view the information) 60,000 burners: Click to view the information.) Read the requirements. Requirement 3. The sales manager at Ward is concerned that the estimate of 30,000 grills may be high and believes that only 27,000 grills will be sold. Production will be cut back, freeing up work space. This space can be use to add the rotisserie attachments whether Ward buys the burners or makes them in-house. At this lower output, Ward will produce the burners in 54 batches of 1,000 units each. On the basis of financial considerations alone, should Ward purchase the burners from the outside vendor? Show your calculations. (If a box is not used in the table, leave the box empty; do not enter a zero.) Make Buy Total relevant costs On the basis of financial considerations alone, should Ward purchase the burners from the outside vendor? Ward purchase the burners from the outside vendor. Cost for 60,000 Units Cost per Unit 4.75 $ Direct materials 285,000 2.00 120,000 Variable direct manufacturing labor Variable manufacturing overhead 1.60 96,000 Inspection, setup, materials handling Machine rent 5,100 9,000 85,000 Allocated fixed costs of plant administration, taxes, and insurance 600,100 Total costs The Ward Company produces gas grills. This year's expected production is 30,000 Ward has received an offer from an outside vendor to supply any number of burners units. Currently, Ward makes the side burners for its grills. Each grill includes two side Ward requires at $9.75 per burner. The following additional information is available: burners. Ward's management accountant reports the following costs for making the (Click to view the information) 60,000 burners: 95 Click to view the information.) Read the requirements. Requirement 1. Assume that if Ward purchases the burners from the outside vendor, the facility where the burners are currently made will remain idle. On the basis of financial considerations alone, should Ward accept the outside vendor's offer at the anticipated volume of 60,000 burners? Show your calculations. (If a box is not used in the table, leave the box empty; do not enter a zero.) Make Buy Total relevant costs On the basis of financial considerations alone, should Ward accept the outside vendor's offer at the anticipated volume of 60,000 burners? Ward accept the outside vendor's offer at the anticipated volume of 60,000 burners. The Ward Company produces gas grills. This year's expected production is 30,000 Ward has received an offer from an outside vendor to supply any number of burners units. Currently, Ward makes the side burners for its grills. Each grill includes two side Ward requires at $9.75 per burner. The following additional information is available: burners. Ward's management accountant reports the following costs for making the i (Click to view the information) 60,000 burners: Click to view the information.) Read the requirements. Requirement 2. For this question, assume that if the burners are purchased outside, the facilities where the burners are currently made will be used to upgrade the grills by adding a rotisserie attachment. (Note: Each grill contains two burners and one rotisserie attachment.) As a consequence, the selling price of grills will be raised by $28. The variable cost per unit of the upgrade would be $21, and additional tooling costs of $75,000 would be incurred. On the basis of financial considerations alone, should Ward make or buy the burners, assuming that 30,000 grills are produced (and sold)? Show your calculations. (Enter any deductions with a parentheses or a minus sign. If a box is not used in the table, leave the box empty; do not enter a zero.) Make Buy Total relevant costs The Ward Company produces gas grills. This year's expected production is 30,000 Ward has received an offer from an outside vendor to supply any number of burners units. Currently, Ward makes the side burners for its grills. Each grill includes two side Ward requires at $9.75 per burner. The following additional information is available: burners. Ward's management accountant reports the following costs for making the i (Click to view the information) 60,000 burners: Click to view the information.) Read the requirements. Requirement 3. The sales manager at Ward is concerned that the estimate of 30,000 grills may be high and believes that only 27,000 grills will be sold. Production will be cut back, freeing up work space. This space can be use to add the rotisserie attachments whether Ward buys the burners or makes them in-house. At this lower output, Ward will produce the burners in 54 batches of 1,000 units each. On the basis of financial considerations alone, should Ward purchase the burners from the outside vendor? Show your calculations. (If a box is not used in the table, leave the box empty; do not enter a zero.) Make Buy Total relevant costs On the basis of financial considerations alone, should Ward purchase the burners from the outside vendor? Ward purchase the burners from the outside vendor. Cost for 60,000 Units Cost per Unit 4.75 $ Direct materials 285,000 2.00 120,000 Variable direct manufacturing labor Variable manufacturing overhead 1.60 96,000 Inspection, setup, materials handling Machine rent 5,100 9,000 85,000 Allocated fixed costs of plant administration, taxes, and insurance 600,100 Total costs
