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how to solve the problem? Golfers, Inc. (Gl) manufactures golf-related equipment including golf balls. This year's expected production of golf balls is 100,000 packs (each
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Golfers, Inc. (Gl) manufactures golf-related equipment including golf balls. This year's expected production of golf balls is 100,000 packs (each consisting of four golf balls). Cost data are as follows: Per Pack 100,000 Packs Product costs directly traceable to balls: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead General allocated overhead $2.80 1.50 0.20 $ 280,000 150,000 20,000 88,000 29,000 $ 567,000 The full cost of one pack of golf balls is $5.67. Gl has received an offer from an outside supplier to supply any desired quantity of balls at a price of $5.60 per pack of four golf balls. The cost accounting department has provided the following information: a. The direct fixed manufacturing overhead is the cost of leasing the machine that stamps out the balls. The machine can produce a maximum of 500,000 balls per year. If the balls are bought, the machine will no longer be needed. b. No other costs will be affected. Required: 1. Prepare an analysis showing whether GI would be better off making or buying the balls at a projected volume of 100,000 packs (400,000 golf balls). (Round "Per Unit" answers to 2 decimal places.) Difference Per Unit S 5.60 $ 2.80 100,000 packs Make Buy $ 560 000 280.000 150 000 S 1.50 Purchase Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Common costs allocated to this product line Total costs S 0 20 20,000 88,000 29 000 567 000 $ 29 000 $ 589 000 2-b. What does the Indifference point Indicate? (Do not round Intermediate calculations and round your final answers to nearest whole number.) It will cost more to buy It will cost more to Yif the quantity exceeds if the quantity is below packs packs 3. Select the quantitative and/or qualitative factors that GI should consider before making the final decision. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Possibility of interruptions in supply Current price and changes in pride. Alternative use for facilities freed upStep by Step Solution
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