Riverside Gnome Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data concerning the decision are as follows: (Click the icon to view the data.) Read the requirements Requirement 1. Should Riverside Gnome Corp manufacture the 670,000 garden tools in the Maryland facility or purchase them from the supplier in Taiwan? Explain. and the cost of purchasing The cost of manufacturing 670,000 garden tools in the Maryland facility is 670,000 garden tools from the Taiwan supplier is Requirements Data Table 1. 2. Should Riverside Gnome Corp manufacture the 670,000 garden tools in the Maryland facility or purchase them from the supplier in Taiwan? Explain. Riverside Gnome Corp believes that the U.S. dollar may weaken in the coming months against the New Taiwanese Dollar and does not want to face any currency risk. Assume that Riverside Gnome Corp can enter into a forward contract today to purchase 34,200 NTD for $4.30. Should Riverside Gnome Corp manufacture the 670,000 garden tools in the Maryland facility or purchase them from the Taiwan supplier? Explain. What are some of the qualitative factors that Riverside Gnome Corp should consider when deciding whether to outsource the garden tools manufacturing to Taiwan? Expected annual sales of tools (in units) 670,000 Average selling price of tools $ 11 Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD) 34,200 Current exchange rate 9,500 NTD = $1 Variable manufacturing costs $3.25 per unit Incremental annual fixed manufacturing costs associated with the new product line $ 340,000 Variable selling and distribution costs $0.80 per unit Annual fixed selling and distribution costs 270,000 Selling and distribution costs are the same regardless of whether the tools are manufactured in Maryland or imported. 3. Print Done