please solve.click image link for bigger view

ddiversify In order to stabilize es , which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to ize sales throughout the year. A natural area for the company to consider i speller company to consider is the production of winter lotions and creams to prevent dry and chapped skin. "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing me ares Refining. N.V., of Aruba. "At a price Aruba. at a price of $20 per drum, we would be paying $4.45 le ying $4.45 less than it costs us to manufacture After considerable research, a winter products line has been developed. However, Silven's president has decided to Introduce only current cost to manufacture one drum is given below (based on 65,000 drums per year): one of the new products for this coming winter. If the product is a success, further expansion in future years will be Initiated. The product selected (called Chap-Off) is a lip balm that will be sold In a lipstick-type tube. The product will be sold to wholesalers In boxes of 24 tubes for $9 per box. Because of excess capacity, no additional fixed manufacturing overhead costs will be Incurred Direct materials produce the product. However, a $139.500 charge for fixed manufacturing overhead will be absorbed by the product under the Fixed overhead ($2.50 general company's absorption costing system. and , se.Be supervision ) 4.98 Using the estimated sales and production of 155.000 boxes of Chap-Off. the Accounting Department has developed the following Total cost per drum manufacturing cost per box: Direct material $2:38 A decision about whether to make or buy the drums is especially Important at this time because the equipment being used to make the drums is completely worn out and must be replaced. The choices facing the company are: Manufacturing overhead 38. 88 Alternative 1: Rent new equipment and continue to make the drums. The equipment would be rented for $156,000 per year. Total cost Alternative 2: Purchase the drums from an outside supplier at $20 per drum. The costs above relate to making both the lip balm and the tube that contains It. As an alternative to making the tubes for Chap-Off manufacturer, wo The new equipment would be more efficient than the equipment that Antilles Refining has been using and, according to the duce direct labor and variable overhead costs by 25%. The old equipme sliven has approached a supplier to discuss the possibility of buying the tubes. The purchase price of the supplier's empty tubes e old equipment has no resale value. Supervision cost would be gooddoand direct materials cost per drum would not be affected by the new equipment. The new equipment's capacity educed by 20%. labor and variable manufacturing overhead costs per box of Chap-Off would be reduced by 10% and its direct materials costs would be The company's total general company overhead would be unaffected by this decision. (Round all Intermediate calculations to 2 decimal places.) Required: Required: Hint You need to separat I. If sliven buys its tubes from the outside supplier. how much of its own Chap-Off manufacturing costs per box will it be able to avoid? separate the manufacturing overhead of $1.90 per box that is shown above into its variable and fixed components to 1. Assuming that 65.000 drums are needed each year. what is the financial advantage (disadvantage) of buying the drums from an derive the correct answer.) outside supplier: 2. What Is the financial advantage (disadvantage) per box of Chap-Off if Sliven buys its tubes from the outside supplier? 7 Assuming that 80,000 dru 3. What Is the financial advantag 1. Should silver industry made to sadvantage) in total (not per box) If Silven buys 155.000 boxes of tubes from the outside supplier? 3. Assuming that 100,000 drums are ne outside supplier? ntage) of buying the drums from an 2. What Is the is the maximum price that Silver should be willing to pay the outside supplier for a box of 24 tubes? make the additional 36 0 s higher sales volume, Silven wo old need to rent extra equipment at a cost of $ boxes of tubes. (For all requirements, enter any "disadvantages" as a negative value. Do not round intermediate calculations.) Assuming that the outside supplier will not accept an order for less than 191,000 boxes of tubes, what is the financial advantage total (not per box) if Silven buys 191,000 boxes of tubes from the outside supplier? Given this new Information, should Silven Industrie Production Financial advantage 7. Refer to the data In (6) above. Assume that the outside supplier will accept an order of any size for the tubes at a price of $1.35 per buying the drums box. How many boxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier? 1. 65,000 drums 80.000 drums Complete this question by entering your answers in the tabs below. 3. 100.000 drums Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 If Silven buys its tubes from the outside supplier, how much of its own Chap-Off manufacturing costs per box will it be able to avoid? (Hint: You need to separate the manufacturing overhead of $1.90 per fixed components to derive the correct answer.) (Do not round intermediate calculations. Round your answer to 2 decimal didable manufacturing costs per box of Chap-Off Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 What is the financial advantage (disadvantage) per box of Chap-Off if Silver buys its tubes from the outside supplier? (Do not round intermediate calculations. Round your answer to 2 decimal places.) per box Reg 1 Req 2 Req 3 Req 4 Reg 5 Reg 6 Req 7 supplier? What is the financial advantage (disadvantage) in total (not per box) if Silven buys 155,000 boxes of tubes from the outside Req 1 Req 2 Req 3 Req 4 Reg 5 Req 6 Reg 7 Should Silven Industries make or buy the tubes? Make Buy Reg 1 Req 2 Req 3 Req 4 Reg 5 Req 6 Req 7 What is the maximum price that Silven should be willing to pay the outside supplier for a box of 24 tubes? (Do not round intermediate calculations. Round your answer to 2 decimal places. Maximum price per box Req 1 Req 2 Req 3 Reg 4 Reg 5 Req 6 Reg 7 Instead of sales of 155,000 boxes of tubes, revised estimates show a sales volume of 191,000 boxes of tubes. At this higher of tubes. Assuming that the outside supplier will not accept an order for less than 191,000 boxes of tubes, what is the financia avantand ( isadvantars ) in total ( not per box) if silver buys 191,000 boxes of tubes from the outside supplier? Given this new information, should Silver Industries make or buy the tubes? Show less A Make or buy the boxes of tubes? Req 1 Req 2 Reg 3 Req 4 Req 5 Req 6 Req 7 Refer to the data in (6) above. Assume that the outside supplier will accept an order of any size for the tubes at a price of $1.35 per box. How many boxes of tubes should Silver make? How many boxes of tubes should it buy from the outside supplier? (Round your intermediate calculations to 2 decimal places.) Number of boxes of tubes manufactured by Silven Number of boxes of tubes purchased from the outside supplier