Question
Please help me to answer all parts of the three questions below. 1. Assume that if the outside vendor supplies the upholstery, the facility where
Please help me to answer all parts of the three questions below.
1. Assume that if the outside vendor supplies the upholstery, the facility where the upholstery is currently made will remain idle. On the basis of financial considerations alone, should Broderick accept the outside vendor's offer at the anticipated volume of 15,000 chairs? Show your calculations.
2.For this question, assume that if the upholstery is purchased outside, the available unused facilities will be used to make pillows to match the chairs. Each pillow sells for $37 with a variable cost of $34. No other costs would change and the company expects to sell 10,000 pillows. On the basis of financial considerations alone, should Broderick make or buy the upholstery for their chairs, assuming that 15,000 chairs are produced (and sold)? Show your calculations.
3.The sales manager at Broderick is concerned that the estimate of 15,000 chairs may be high and believes that only 11,000 chairs will be sold. Production will be cut back, freeing up work space. This space can be use to make10,000 pillows whether Broderick buys the upholstery or makes it in-house. On the basis of financial considerations alone, should Broderick purchase the upholstery from the outside vendor? Show your calculations.
Broderick has received an offer from an outside vendor to supply the upholstery for the chairs Broderick requires at $11.00 per chair The Broderick Company produces chairs. This year's expected production is 15,000 units. Currently, Broderick makes the upholstery for the chairs in its factory. Bruderick's management accountant reports the following costs for the upholstery for the 15,000 chairs: (Click to view the information.) Read the requirements. Requirement 1. Assume that if the outside vendor supplies the upholstery, the facility where the upholstery is currently made will remain idle. On the basis of financial considerations alone, should Broderick accept the outside vendor's offer at the anticipated volume of 15,000 chairs? Show your calculations. (If an input field is not used in the table, leave the input field empty: do not enter a zero.) Relevant Costs Make Buy Direct materials i Data Table Direct manufacturing labor Variable manufacturing overhead Variable inspection, satup, materials Cost for 15,000 handling Cost per Unit Units Direct materials S 4.75 S 71,250 Variable direct manufacturing labor 3.00 45,000 Total relevant costs Variable manufacturing overhead 0.95 14,250 Variable inspection, setup, materials handling 120.000 Requirements Allocated fixed costs of plant administration, taxes, and insurance 35,000 S Total costs 285,500 Print Done 1. Assume that if the outside vendor supplies the upholstery, the facility where the upholstery is currently made will remain idle. On the basis of financial considerations alone, should Broderick accept the outside vendor's offer at the anticipated volume of 15,000 chairs? Show your calculations. 2. For this question, assume that if the upholstery is purchased outside, the available unused facilities will be used to make pillows to match the chairs. Each pillow sells for $37 with a variable cost of $34. No other costs would change and the company expects to sell 10,000 pillows. On the basis of financial considerations alone, should Broderick make or buy the upholstery for their chairs, assuming that 15,000 chairs are produced (and sold)? Show your calculations. 3. The sales manager at Broderick is concerned that the estimate of 15,000 chairs may be high and believes that only 11,000 chairs will be sold. Production will be cut back, freeing up work space. This space can be use to make 10,000 pillows whether Broderick buys the upholstery or makes it in-house. On the basis of financial considerations alone, should Broderick purchase the upholstery from the outside vendor? Show your calculations Check
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started