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Cullumber, Inc, is a leading manufacturer of sporting equipment. The company is in the process of evaluating the best use of its Plastics Division, which
Cullumber, Inc, is a leading manufacturer of sporting equipment. The company is in the process of evaluating the best use of its
Plastics Division, which is currently manufacturing molded fishing tackle boxes. The company manufactures and sells tackle
boxes annually, making full use of its available capacity. The selling prices and costs of the tackle boxes are as follows:
Allocated to products based on expected production volume.
Per unit variable selling and administrative costs are the same for all products.
Managers believe they could sell tackle boxes if the company had sufficient manufacturing capacity. RodReel has offered to
supply tackle boxes per year at a price of $ per box, including delivery to Cullumber's facility. Cedric Smith, Cullumber's
product manager, believes the company could make better use of its plastics department by manufacturing skateboards. A marketing
report indicates that skateboards could be sold at a price of $ each. Variable costs to make the boards would be $ per
board.
Cullumber has three options:
Make and sell tackle boxes.
Make tackle boxes, buy additional tackle boxes, and sell tackle boxes.
Make and sell skateboards, and buy and sell tackle boxes.
Compare the company's operating income under the three options. Round price per box to decimal places, eg and all other
answers to decimal places, es Do not leave any answer field blank. Enter for amounts.
Option &
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