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Marigold Systems produces and sells speakers and CD players. The following information has been collected about the costs related to the systems: $72 Selling price
Marigold Systems produces and sells speakers and CD players. The following information has been collected about the costs related to the systems: $72 Selling price per unit Production costs per unit Direct materials Direct labour Variable overhead Total fixed overhead $24 15 2 $345,780 Marigold normally produces 22,600 of these systems per year. The managers have recently received an offer from a Mexican company to produce these systems for $49 each. The managers estimate that $253,120 of Marigold's fixed costs could be eliminated if they accept the offer. Perform a quantitative analysis for the decision, and present your results in a schedule. (Round entries for this part to 2 decimal places, e.g. 12.55.) Make Buy $ Purchase price Variable costs: Direct materials Direct labour Variable overhead Avoidable fixed cost Total $ Marigold should Under the general decision rule for this type of decision, what production level is required for Marigold's managers to be indifferent? Production level: systems
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