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Please i want answer for this question Bronson Company manufactures a variety of ballpoint pens. The company has just received an offer from an outside
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Bronson Company manufactures a variety of ballpoint pens. The company has just received an offer from an outside supplier to provide the ink cartridge for the company's Zippo pen line, at a price of $0.52 per dozen cartridges. The company is interested in this offer because its own production of cartridges is at capacity Bronson Company estimates that if the supplier's offer were accepted, the direct labor and variable manufacturing overhead costs of the Zippo pen line would be reduced by 10% and the direct materials cost would be reduced by 20%. Under present operations, Bronson Company manufactures all of its own pens from start to finish. The Zippo pens are sold through wholesalers at $7 per box. Each box contains one dozen pens. Fixed manufacturing overhead costs charged to the Zippo pen line total $56,000 each year. (The same equipment and facilities are used to produce several pen lines.) The present cost of producing one dozen Zippo pens (one box) is given below: Direct materials Direct labor $1.10 1.20 0.60 Total cost $2.90 Includes both variable and fixed manufacturing overhead based on production of 140,000 boxes of pens each year Required a. Calculate the total variable cost of producing one box of Zippo pens? (Do not round intermediate calculations Round your answer to 2 decimal places. Omit the "$ sign in your response.) Total relevant variable cost per box b. Calculate the total variable cost of purchasing one box of Zippo pens? (Do not round intermediate calculations Round your answer to 2 decimal places. Omit the "$ sign in your response.) Total relevant variable cost per box Step by Step Solution
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