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need help with this problem please! im stuck 3 P8-3B. Make or Buy Walsh Corporation currently makes the nylon mooring cover for its main product.a
need help with this problem please! im stuck
3 P8-3B. Make or Buy Walsh Corporation currently makes the nylon mooring cover for its main product.a fiberglass boat designed for tournament bass fishing. The costs of producing the 2,000 covers needed each year follow: . $320,000 64,000 32,000 128,000 96,000 160,000 Nylon fabric . . Calvin Company, a specialty fabricator of synthetic materials, can make the needed covers of compa- rable quality for $320 each, F.O.B. shipping point. Walsh would furnish its own trademark insignia at a unit cost of $20. Transportation in would be $16 per unit, paid by Walsh Corporation. Walsh's chief accountant has prepared a cost analysis that shows that only 30% of fixed overhea could be avoided if the covers are purchased. The covers have been made in a remote section of Walsh factory building, using equipment for which no alternate use is apparent in the foreseeable future Required a. Prepare a differential analysis showing whether or not you would recommend that the moorin covers be purchased from Calvin Company bAssuming that the production capacity released by purchasing the covers could be devoted to subcontracting job for another company that netted a contribution margin of $64,000, what maxi mum purchase price could Walsh pay for the covers? Identify two important qualitative factors that Walsh Corporation should consider in deciding whether to purchase the needed covers. cStep by Step Solution
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