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Please show all work. Montgomery Scotty Scott and Charles Tucker own a company, Earth Defense, that manufactures and sells Alien detectors. It reports the following
Please show all work.
Montgomery "Scotty" Scott and Charles Tucker own a company, Earth Defense, that manufactures and sells Alien detectors. It reports the following cost information about the costs of making Alien detectors in 2016 and the expected costs in 2017: Earth Defense manufactured 9,000 Alien detectors in 2016 in 40 batches of 225 each. In 2017, Earth Defense anticipates needing 12,000 detectors. The detectors would be produced in 80 batches of 155 each. Federation Security has approached Scotty and Charles about supplying detectors to Earth Defense in 2017 at $290 per detector on whatever delivery schedule Earth Defense wants. Calculate the total expected manufacturing cost per unit of making detectors in 2017. Suppose the capacity currently used to make Alien detectors will become idle if Earth Defense purchases detectors from Federation Security. On the basis of financial consideration alone, should the company make detectors or buy them from Federation Security? Show your calculations. Now suppose that if Earth Defense purchases detectors from the Federation Security, its best alternative use of the capacity currently used for detectors is to make and sell anti-Alien weaponry to the U.S. Army. Earth Defense estimates the following incremental revenues and costs from anti-Alien weaponry. On the basis of financial considerations alone, should Earth Defense make Alien detectors or buy them from the Federation Security? Show your calculationsStep by Step Solution
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