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Richardson Motors manufactures the T-305, a necessary part used in their production of large diesel engines. Each month Richardson manufactures 10T305s. The monthly cost of
Richardson Motors manufactures the T-305, a necessary part used in their production of large diesel engines. Each month Richardson manufactures 10T305s. The monthly cost of manufacturing 10T305s appear below. Recently, Richardson was approached by one its reliable vendors, Simpson Castings. Simpson offered to manufacture 10 T-305s for Richardson at a cost of $32,000. Richardson determines that if it accepts Simpson's offer, the capacity that would become available, would be used to manufacture another part which would generate $4,000 in additional contribution margin. Richardson's manufacturing overhead costs are 50% variable. Should Richardson stop manufacturing the T-305 and purchase it instead from Simpson? What is the cost change Richardson would incur if Richardson stops manufacturing the T-305 and purchases it instead from Simpson? Acme Soap Company manufactures two types of bars of soap, Pumice and Lavender. Data on these two products are as follows: Fixed Costs incurred to manufacture both products are $265,200. What is Acme's breakeven point in sales units for Acme
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