Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need help urgently please. Super Motors produces electric motors for sump pumps. The company?s normal production volume is 6000 motors per month. The maximum production

Need help urgently please.

image text in transcribedimage text in transcribed

Super Motors produces electric motors for sump pumps. The company?s normal production volume is 6000 motors per month. The maximum production capacity is 12,000 motors per month. The current selling price per motor is 51,000. The cost per unit of manufacturing and marketing the motors at the normal volume is as follows: Required: Answer the following independent questions. 1-a. The Provincial Flood Relief Agency wishes to purchase 680 motors during the month of June. The agency is willing to pay a fixed fee of 5720,000 and reimburse Super Motors for all manufacturing costs incurred on behalf of the agency in making the 680 motors. June is the busiest month for Super Motors, and there are sufficient orders from customers to fully utilize the production capacity of 12,000 motors. There will be no variable marketing costs on the government contract. Compute the incremental benefit of the contract 1-b. Indicate whether the agency?s contract should be accepted? yes N0 2-a. An outside contractor is willing to supply 3,000 motors at a price of 5480 per unit. If the offer is accepted, the company will make 3,000 motors in - house and buy 3000 motors from the contractor The company?s fixed manufacturing costs will decline by 30% and the variable marketing costs per unit on the 3,000 motors purchased will decline by 25%. Compute the cost in each option. (Do not round intermediate calculations.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Assurance Services A Systematic Approach

Authors: William F. Messier, Steven M. Glover, Douglas F. Prawitt

4th Edition

0071117474, 9780071117470

More Books

Students also viewed these Accounting questions

Question

What is conservative approach ?

Answered: 1 week ago

Question

What are the basic financial decisions ?

Answered: 1 week ago