Problem 13-25 (Algo) Sourcing Decisions [LO13-3] Silven industries, which manufactures and sells summer lotions and insect repellents, has decided to diversify in order to stabliize sales throughout the year. A notural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, Silven developed a new lip balm called Chap-Off that is sold to wholesalers in boxes of 24 tubes for $12 per box. Because of excess capacity, no additional fixed manufacturing overhead costs will be incurred to produce Chap-Oft. However. a $110,000 charge for flxed manufacturing overhead will be absorbed by the product under the company's absorption costing system. Using estimated sales and production of 110,000 boxes of Chap-Off, the Accounting Department developed the following manufacturing cost per box: them from the outside supplier, its direct labor and variable manufacturing overhead costs per box of Chap-Off would decrease by to\% and its direct materials costs would drop by 20%. Required: 1. If-Siven buys its tubes from the outside supplier, how much of its own Chap-Orf manufacturing costs per box will it avoid? (Hint: You need to separate the manufacturing overthead of $2.10 per box shown above into its variable and fixed components.) 2. What is the financial advantage (disadvantoge) per box of Chap. Ofr if Siven buys its tubes from the outside supplier? 3. What is the financial advantage (disadvantage) in total (not per box) if Silven buys 110,000 boxes of tubes from the outside supplier? 4. Should Silven Industries make or buy the tubes? 5. What is the moximum price Silven should be willing to pay the outside supplier for a bok of 24 tubes? 6. Instead of sates of 110,000 boxes of tubes, revised estimates show a sales volume of 137.000 boxes of fubes. At this higher sales volume, Silven would need to rent extra equipment at in cost of $47,000 per year to make the additional 27,000 boxes of tubes. Assuming the outside suppliet wil not accept an order for less than 137,000 boxes of tubes, what is the financial advantage (cilsadvantage) in total (not per box) if Silven buys 137,000 boxes of tubes from the outside supplier? Given this new information. should Silven inctustries make or buy the tubes? 7. Refer to the dato in Required 6 . Assume the outside suppller will accept an order of any size for the tubes at aprice of $1.65 per box. How many boxes of tubes should Saven make? How many boxes of tubes should it buy from the outside supplier? Complete this question by entering your answers in the tabs below. If Silven buys its tubes from the outside supplier, how much of its own Chap-Off manufacturing costs per box will it avoid? (Hint: You need to separate the manufacturing overthead of $2.10 per box shown above into its variable and fixed components.) Note: Do not round internediate calculations Round your answer to 2 decimal places. Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) per box of Chap-Off if Silven buys its tubes from the outside supplier? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) in total (not per box) if Silven buys 110,000 boxes of tubes from the outside supplier? Complete this question by entering your answers in the tabs below. Should Silven Industries make or buy the tubes? Complete this question by entering your answers in the tabs below. What is the maximum price Silven should be willing to pay the outside supplier for a box of 24 tubes? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Complete this question by entering your answers in the tabs below. Instead of sales of 110,000 boxes of tubes, revised estimates show a sales volume of 137,000 boxes of tubes. At this higher sales volume, Silven would need to rent extra equipment at a cost of $47,000 per year to make the additional 27,000 boxes of tubes. Assuming the outside supplier will not accept an order for less than 137,000 boxes of tubes, what is the financial advantage (disadvantage) in total (not per box) if Silven buys 137,000 boxes of tubes from the outside supplier? Given this new information, should Silven Industries make or buy the tubes? Complete this question by entering your answers in the tabs below. Refer to the data in Required 6. Assume the outside supplier will accept an order of any size for the tubes at a price of $1.65 per box. How many boxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier? Note: Round your intermediate calculations to 2 decimal places