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Required information [The following informotion opplies to the questions disployed below.] Morning Sky, Incorporsted (MSI), manufactures and sells computer games. The compony has several product
Required information [The following informotion opplies to the questions disployed below.] Morning Sky, Incorporsted (MSI), manufactures and sells computer games. The compony has several product lines bosed on the age range of the terget market. MSI sells both individual games as well as pockoged sets. All games are in CD format, and some utilize accessories such as steering wheels, electronic tablets, and hand controls. To date, MSI has developed and manufactured all the CDs itself as well as the accessories and packaging for all of its products. The gaming market has troditionally been targeted at teenagers and young odults; however, the increasing afforosbility of computers and the incorporstion of computer activities into junior high and elementary school curriculums has led to o significant incresse in sales to younger children. MSI has alwoys included games for younger children but now wants to expend its business to capitelize on chenges in the industry. The compony currently hes excess copocity and is investigating severel possible woys to improve profitability. MSI is considering outsourcing the production of the handheld control module used with some of its products. The company has received a bid from Monte Legend Compsny (MLC) to produce 17,000 units of the module per yesr for $3200 esch. The following information pertsins to MSl's production of the control modules: MSI hos determined it could eliminete all varisble costs if the control modules were produced externslly, but none of the fixed overhesd is svoidsble. At this time, MSI hes no specific use in mind for the spece that is currently declicated to the control module production. Required: 1. Compute the difference in cost between making and buying the control module. 2. Should MSI buy the modules from MLC or continue to make them? 3-a. Suppose the MSI spece currently used for the modules could be utilized by a new product line that would generate $43,000 in onnusl profit. Recompute the difference in cost between making and buying under this scenario. 3.b. Does this change your recommendation to MSI? Complete this question by entering your answers in the tabs below. Compute the difference in cost between making and buying the control module. Should MSI buy the modules from MLC or continue to make them? Should MSI buy the modules from MLC or continue to make them? Suppose the MSI space currently used for the modules could be utilized by a new product line that would generate $43,000 in annual profit. Recompute the difference in cost between making and buying under this scenario. Does this change your recommendation to MSI
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