Garden Gnome Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data concerning the decision are as follows: (Click the icon to view the data.) Read the requirements. Requirement 1. Should Garden Gnome Corp manufacture the 720,000 garden tools in the Maryland facility or purchase them from the supplier in Taiwan? Explain. and the cost of purchasing The cost of manufacturing 720,000 garden tools in the Maryland facility is 720,000 garden tools from the Taiwan supplier is -X Data Table Expected annual sales of tools (in units) 720,000 Average selling price of tools $ 9 Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD) 30,100 Current exchange rate 8,600 NTD = $1 Variable manufacturing costs $3.25 per unit Incremental annual fixed manufacturing costs associated with the new product line $ 390,000 Variable selling and distribution costsa $0.70 per unit Annual fixed selling and distribution costs $ 285,000 a Selling and distribution costs are the same regardless of whether the tools are manufactured in Maryland or imported. Print Done i Requirements i -X 1. 2. Should Garden Gnome Corp manufacture the 720,000 garden tools in the Maryland facility or purchase them from the supplier in Taiwan? Explain. Garden Gnome Corp believes that the U.S. dollar may weaken in the coming months against the New Taiwanese Dollar and does not want to face any currency risk. Assume that Garden Gnome Corp can enter into a forward contract today to purchase 30,100 NTD for $4.80. Should Garden Gnome Corp manufacture the 720,000 garden tools in the Maryland facility or purchase them from the Taiwan supplier? Explain. What are some of the qualitative factors that Garden Gnome Corp should consider when deciding whether to outsource the garden tools manufacturing to Taiwan? 3