silven industries

Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consideris the production of winter lotions and creams to prevent dry and chapped skin After considerable research, a winter products line has been developed. However, Silven's president has decided to introduce only one of the new products for this coming winter. lfthe productis 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 of24 tubes for $7 per box. Because ofexcess capacity, no additional fixed manufacturing overhead costs will be incurred to produce the product However, a S91.000 charge for fxed manufacturing overhead will be absorbed by the product under the company's absorption costing system. Using the estimated sales and production of 130,000 boxes of Chap-off, the Accounting Department has developed the following cost per box Direct materials 3.10 Direct labor Manufacturing overhead 1.10 Total cost 5.90 The costs above include costs for producing both the lip balm and the tube that contains it As an alternative to making the tubes, $ilven has approached a supplier to discuss the possibility of purchasing the tubes for Chap-Off The purchase price of the empty tubes from the supplier would be S140 per box of 24 tubes lf Silven Industries accepts the purchase proposal direct labor and variable manufacturing overhead costs per boxof Chap-off would be reduced by 10% and direct materials costs would be reduced by 25% Required: 1 a Calculate the total variable cost of producing one box of Chap-off (Round your intermediate calculations and final