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Boston Exercutive, Inc, produces executive imousines and currently manufactures the mini-ber inset at these costs Cost per Unit Variable costs Direct material $940 Direct labor
Boston Exercutive, Inc, produces executive imousines and currently manufactures the mini-ber inset at these costs Cost per Unit Variable costs Direct material $940 Direct labor 640 Variable Overhead 310 $1,800 $490 Total variable costs Fixed costs: Depreciation of equipment Depreciation of building Supervisors salaries Total Txed costs 210 210 $1,010 Total cost $2,900 The company receive an offer from Elite Mini-Bars to produce the insets for $2,090 per unit and supply 1,000 mini-bers for the coming year's estimated production. If the company accepts this offer and shuts down production of this part of the business, product on workers and supervisors will be reassigned to other areas. Assume that for the short-term decision- making process demonstrated in this problem, the company's total labor costs (direct labor and supervisor salaries will remain the same if the bar inserts are purchased The specialized cquipment cannot be used and has no marict Valuc. However, the space occupied by the mini-bar production can be used by a diferent production group that will lease it for $55,000 per year. , A. Calculate the differential cost of mini-bar insert. If an amount box does not require an entry, leave It blank. Cost of Making 1000 Bar Inserts Cost of Buying 1,000 Bar Inserts Differential Cost (Savings) Variable Costs Direct material Direct labor Variable overhead Fixed Costs Equiment depreciation Building depreciation Supervisor salaries Other Cost Savings eased space Cost of buying bar inserts Tatalo B. Should the company make or buy the mini bar not? Buy Fustus
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