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Please show all work in order to receive thumbs up. Boston Exemcutive, Inc., produces executive limousines and currently manufactures the mini-bar inset at these costs:
Please show all work in order to receive thumbs up.
Boston Exemcutive, Inc., produces executive limousines and currently manufactures the mini-bar inset at these costs: Cost per Unit Variable costs: Direct material $940 660 Direct labor Variable overhead 310 Total variable costs $1,910 Fixed costs: Depreciation of equipment Depreciation of building $510 200 Supervisors salaries 310 Total fixed costs $1,020 Total cost $2,930 The company received an offer from Elite Mini-Bars to produce the insets for $2,110 per unit and supply 1,000 mini-bars for the coming year's estimated production. If the company accepts this offer and shuts down production of this part of the business, production workers and supervisors will be reassigned to other areas. Assume that for the short-term decision-making process demonstrated in this problem, the company's total labor costs (direct labor and supervisor salaries) will remain the same if the bar inserts are purchased. The specialized equipment cannot be used and has no market value. However, the space occupied by the mini-bar production can be used by a different production group that will lease it for $55,000 per year. A. Calculate the differential cost of mini-bar insert. If an amount box does not require an entry, leave it blank. Cost of Making 1,000 Bar Inserts Cost of Buying 1,000 Bar Inserts Differential Cost (Savings) Variable Costs Direct material Direct labor 950,000 x Variable overhead $ $ s Fixed Costs Equipment depreciation $ $ Building depreciation Supervisor salaries S S Other Cost Savings Leased space Cost of buying bar inserts $ Total cost $ $ $
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