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frame fittings - $24,000 (underneath aluminum tubing) Allen Corporation currently makes the nylon convertible cop for its main product, a fiberglass boat designed especially for
frame fittings - $24,000 (underneath aluminum tubing)
Allen Corporation currently makes the nylon convertible cop for its main product, a fiberglass boat designed especially for water skiing The costs of producing the 1, 500 tops needed each year follow: Dustin Company, a specialty fabricator of synthetic materials, can make the needed tops of comparable quality for $420 each, F.O.B. shipping point. Allen would furnish its own trademark insignia at a unit cost of $16. Transportation in would be $28 per unit, paid by Allen Corporation. Allen's chief accountant has prepared a cost analysis that shows that only 20% of fixed overhead could be avoided if the tops are purchased. The tops have been made in a remote section of Allen's factory building using equipment for which no alternate use is apparent In the foreseeable future. Prepare a differential analysis showing whether or not you would recommend that the convertible tops be purchased from Dustin Company. If appropriate, use a negative sign with your answer to represent a net disadvantage answer. Do not use negative signs with any other answers. Assuming that the production capacity released by purchasing the tops could be devoted to a subcontracting job for another company that netted a contribution margin of $46, 100, what maximum purchase price could Allen Corporation pay for the tops? Round answer to two decimal places, if applicable $Step by Step Solution
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