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Please, help me with this problem. Exercise 4-48 (Algo) Make or Buy with Opportunity Costs (LO 4-4) Mel suddenly finds an opportunity to sell boxed
Please, help me with this problem.
Exercise 4-48 (Algo) Make or Buy with Opportunity Costs (LO 4-4) Mel suddenly finds an opportunity to sell boxed dinners. The new opportunity would require the use of the 30 percent unused capacity. The contribution margin from the dinners would amount to $3,000 annually. Required: a. If Mel decides to sell dinners, what are the total costs for both making and buying the cookies? Answer is complete but not entirely correct. $ Total cost of making cookies Total cost of buying cookies 11,500 X 14,260 X $ b. Should Mel continue to buy the cookies? Yes No Return to question 2 Exercise 4-46 (Algo) Make-or-Buy Decisions (LO 4-4) Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to sell these rear wheel assemblies to Mobility. If Mobility makes the assembly, its cost per rear wheel assembly is as follows (based on annual production of 1,800 units): Direct materials Direct labor Variable overhead Fixed overhead $ 27 97 17 40 Total $181 Trailblazers has offered to sell the assembly to Mobility for $153 each. The total order would amount to 1,800 rear wheel assemblies per year, which Mobility's management will buy instead of make if Mobility can save at least $20,000 per year. Accepting Trailblazers's offer would eliminate annual fixed overhead of $37,550. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo Select "none" if there is no effect.) the base. MAMALIAI Alatakut wat antal AWARD Return to 2 offer would eliminate annual fixed overhead of $37,550. Required: a. Prepare a schedule that shows the total differential costs. (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Answer is complete but not entirely correct. Trailblazers' offer $ Materials Status Quo Alternative 0 $ 275,400 $ 48,600 0 174,600 0 30,600 0 72,000 0 X 325,800 $ 275,400 $ Labor Difference 275,400 higher 48,600 lower 174,600 lower 30,600 lower 37,550 lower 50,400 X lower Variable overhead Fixed overhead applied Total costs $ b. Should Mobility make rear wheel assemblies or buy them from Trailblazers? Make BuyStep by Step Solution
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