Data Table $ 51,000 4,500 Materials Labor Indirect manufacturing costs Variable Fixed 6,600 21,600 83,700 $ Total Print Done Requirements 1. How much, if any, would Lemon Yellow save by buying the boxes from Imperial Box? 2. What subjective factors should affect Lemon Yellow's decision whether to make or buy the boxes? 3. Suppose all the fixed costs represent depreciation on equipment that was purchased for $216,000 and is just about at the end of its 10-year life. New replacement equipment will cost $900,000 and is also expected to last 10 years. In this case, how much, if any, would Lemon Yellow save by buying the boxes from Imperial Box? Print Done Lemon Yellow Fruit Company sells premium quality oranges and other citrus fruits by mail order. Protecting the fruit during shipping is important so the company has designed and produces shipping boxes. The annual cost to make 30,000 boxes is (Click the icon to view the costs.) Therefore, the cost per box averages $2.79. Suppose Imperial Box submits a bid to supply Lemon Yellow with boxes for $2.49 per box. Lemon Yellow must give Imperial Box the box design specifications, and the boxes will be made according to those specs. Read the requirements Requirement 1. How much, if any, would Lemon Yellow save by buying the boxes from Imperial Box? Assume all fixed costs are unavoidable. Begin by completing the table below to determine the total relevant costs of making the boxes versus purchasing the boxes from Imperial Box. (Only complete the necessary answer boxes.) Buy Direct materials Make 51,000 4,500 6.600 Direct labor Variable factory overhead Purchase cost 74,700 62.100 Total relevant costs 74,700 How much, if any, would Lemon Yellow save by buying the boxes from Imperial Box. Lemon Yellow would V S 12,600 if it purchased the boxes from Imperial Box. Therefore, Lemon Yellow should Imperial Box's offer. Requirement 2. What subjective factors should affect Lemon Yellow's decision whether to make or buy the boxes? (Select all that apply.) A. Is a timely supply of boxes assured, even if the number needed changes? B. Does Lemon Yellow sacrifice proprietary information when disclosing the box specifications to Imperial Box? C. Might Imperial Box raise prices if Lemon Yellow closed down its box-making facility? D. Will sub-contracting the box production affect the quality of the boxes? Requirement 3. Suppose all the fixed costs represent depreciation on equipment that was purchased for $216,000 and is just about at the end of its 10-year life. New replacement equipment will cost $900,000 and is also expected to last 10 years. Assume SO in residual value. In this case, how much, if any, would Lemon Yellow save by buying the boxes from Imperial Box? Begin by completing the table below to determine the total relevant costs of making the boxes versus purchasing the boxes from Imperial Box in this scenario. (Only complete the necessary answer boxes.) Make Buy Total relevant costs In this case, how much, if any, would Lemon Yellow save by buying the boxes from Imperial Box? In this case, Lemon Yellow would $ if it purchased the boxes from Imperial Box. Therefore, Lemon Yellow should Imperial Box's offer
