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Marty Monitors Ltd, a manufacturer of computer monitors, currently produces a 19-inch LCD monitor. The company's accounting department has reported the following annual costs of
Marty Monitors Ltd, a manufacturer of computer monitors, currently produces a 19-inch LCD monitor. The company's accounting department has reported the following annual costs of producing the LCD monitor internally Marty Monitors Annual Production Costs for 19-inch LCD Monitor Per Unit 11,000 Units Direct Materials $22.00 $242.000 Direct Labor $12.00 $132.000 Variable Overheid $12.00 $132.000 Production Supervisor's Salary $15.00 $165,000 Depreciation of LCD manufacturing equipment $6.00 $66,000 Allocated Foed Overheid $5.00 $55.000 Total Cast $72.00 $792,000 An external supplier has offered to provide Marty Monitors 11,000 units of the same LCD monitor per year at a price of $S5 each Also consider the following information The LCD manufacturing equipment has no salvage value and has no other useaside from producing the 19-inch LCD monitors. It cannot be sold. The fived overhead casts allocated to the LCD monitors are common to all items produced in the factory The production supervisor will take cover duties in another department if the monitors are purchased from the external supplies. If this is the case, his annual salary will drap to $148,500. Should the company continue manufacturing the monitors internally ar begin purchasing them from the external supplier? Do not enter dollar signs mes in the input bases Round all answers to 2 decimal places. Jenson Monitors Make or Buy Analysis Production Cost Per Unit Per Unit Differential Cost Make Buy Total Differential Cost (11.000 Units) Make Direct Materials $22.00 Direct Labor $12.00 Variable Overhead $12.00 Supervisor's Salary $15.00 $ Depreciation of Equipment (sunk) $6.00 $ Allocated Fixed Overhead (common SS.OOS Outside Purchase Price S Total Relevant Cost $72.00 $ The company should
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