Data table GA Direct materials Variable direct manufacturing labor Variable manufacturing overhead Variable inspection, setup, materials handling Allocated fixed costs of plant administration, taxes, and insurance Cost for 15,000 Cost per Unit Units $ 5.75 $ 86,250 2.30 34,500 0.90 13,500 30,000 75,000 $ 239,250 Total costs The Rider Company produces chairs. This year's expected production is 15,000 units Currently, Rider makes the upholstery for the chairs in its factory. Rider's management accountant reports the following costs for the upholstery for the 15,000 chairs: (Click view the information.) Rider has received an offer from an outside vendor to supply the upholstery for the chairs Rider requires at $18.00 per chair. Read the requirements DER Requirement 1. Assume that if the outside vendor supplies the upholstery, the facility where the upholstery is currently made will remain idle. On the basis of financial considerations alone should Rider accept the outside vendor's offer at the anticipated volume of 15,000 chairs? Show your calculations. (If an input field is not used in the table, leave the input field empty, do not enter a zero.) Relevant Costs Make Buy Total relevant costs On the basis of financial considerations alone, should Rider accept the outside vendor's offer at the anticipated volume of 15,000 chairs? Rider accept the outside vendor's offer at the anticipated volume of 15,000 chairs. Requirement 2. For this question, assume that if the upholstery is purchased outside, the available unused facilities will be used to make pillows to match the chairs. Each pillow costs $37 with a variable cost of $30. No other costs would change and the company expects to sell 10,000 pillows. On the basis of financial considerations alone, should Rider make or buy the upholstery for their chairs, assuming that 15,000 chairs are produced and sold)? Show your calculations. (Enter any deductions with a parentheses or a minus sign. If an input field is not used in the table, leave the input field empty, do not enter a zero.) Relevant Costs Make Buy Total relevant costs On the basis of financial considerations alone, should Rider make or buy the upholstery, assuming that 15,000 chairs are produced and sold)? Rider should the upholstery, assuming that 15,000 chairs are produced and sold). Requirement 3. The sales manager at Rider is concerned that the estimate of 15,000 chairs may be high and believes that only 12,000 chairs will be sold. Production will be cut back, freeing up work space. This space can be use to make 10,000 pillows whether Rider buys the upholstery or makes it in-house. On the basis of financial considerations alone, should Rider purchase the upholstery from the outside vendor? Show your calculations. (If an input field is not used in the table, leave the input field empty; do not enter a zero.) Relevant Costs Make Buy Total relevant costs On the basis of financial considerations alone, should Rider purchase the upholstery from the outside vendor? Rider purchase the upholstery from the outside vendor
