Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversity in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chopped skin After considerable research, a winter products Ine has been developed. However, Sliven's president has decided to introduce only one of the new products for this coming winter of the product is a success, further expansion in future years will be initiated. The product selected called Chap-On) is a lip balm that will be sold in a lipstick-type tube. The product will be sold to wholesalers in boxes of 24 tubes for $10 per box Because of excess capacity, no additional fixed manufacturing overhead costs will be incurred to produce the product. However, a $80,500 charge for fixed manufacturing overhead will be absorbed by the product under the company's absorption costing system Using the estimated sales and production of 115,000 boxes of Chap-off, the Accounting Department has developed the following manufacturing cost per box Direct material Direct labor Manufacturing overhead Total cost 54.20 2.60 1.70 $8.50 The costs above relate to making both the lip balm and the tube that contains it. As an alternative to making the tubes for Chap-ort, Silven has approached a supplier to discuss the possibility of buying the tubes. The purchase price of the supplier's empty tubes would be $190 per box of 24 tubes. If Silven Industries stops making the tubes and buys them from the outside supplier, its direct labor and variable manufacturing overhead costs per box of Chap-Off would be reduced by 15% and its direct materials costs would be reduced by 30% Required: 1. of Silven buyt its tubes from the outside supplier, how much of its own Chap-Off manufacturing costs per box will it be able to avoid? (Hint: You need to separate the manufacturing overhead of $170 per box that is shown above into its variable and fixed components to derive the correct answer.) 2. What is the financial advantage (disadvantage) per box of Chap-Off if Silver buys its tubes from the outside supplier? 3. What is the financial advantage (disadvantage) in total (not per box) if Silven buys 115,000 boxes of tubes from the outside supplier? 4. Should Silven Industries make or buy the tubes? 5. What is the maximum price that Silven should be willing to pay the outside supplier for a box of 24 tubes? 6. Instead of sales of 115,000 boxes of tubes, revised estimates show a sales volume of 138,000 boes of tubes. At this higher sales volume, Silver would need to rent extra equipment at a cost of $43,000 per year to make the additional 23.000 boxes of tubes Assuming that the outside supplier will not accept an order for less than 138,000 boxes of tubes, what is the financial advantage (disadvantage) in total (not per box) if Silven buys 138,000 boxes of tubes from the outside supplier? Given this new information should Silven Industries make or buy the tubes? 7. Refer to the data in Required 6. Assume that the outside supplier will accept an order of any sire for the tubes at a price of $190 per box. How many boxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier? 1154 Next > The costs above relate to making both the lobormand the best contains it. As a termave to making the tubes for Chap On Silven has approached a supplier to discuss the possibility of buying the tubes. The purchase price of the suppliers emples would be $190 per box of 24 tubes. Siiven Industries stops making the tubes and buy them from the outside suppliers rect labor and variable manufacturing overhead costs per box of Chap on would be reduced by 15 and its direct materials costs would be reduced by 30% Required: 1. Siven buys its tubes from the outside Suppliec how much of its own cap Of maruteluring costs per box will be to Otint You need to separate the manufacturing overhead of $170 per box that is shown above to its variable and components to derive the correct answer) 2. What is the financial advantage disadvantages per box of Chap On Sven buys its tubes from the outside super! 3. What is the financial advantage disadvantage in totalino per box Slven buys 115.000 bors of tubes from the outside supplier? 4. Should Silven Industries make or buy the tubes? 5. What is the maximum price that Siven should be willing to pay the outside wolier for a box of 24 ubes? 6. Instead of sales of 115,000 boxes of tubes, revised estimates show a sales volume of 3.000 Does of tubes. At this higher volume, Silven would need to rent extra equipment at a cost of $43,000 per year to make the additional 23.000 tons of tubes Assuming that the outside supplier will not accept an order for less than 38.000 bomen offbes, what is the financial advantage disadvantage in totalinot per boxit Siven buys 138.000 bows of tubes from the outside supplier? Given the new Information should Silven Industries make or buy the tubes? 7. Refer to the data in Required 6. Assume that the outside supplier wit accept ander of any size for the best price of $100 per box How many boxes of tubes should Silver make? How many boxes of tubes should buy from the outside supplier Complete this question by entering your answers in the tabe below Begi 2 Res Hater to the data in Required 6. Assume that the outside we will copt an order of any of the best $1.00 per box. How many boxes of tubes should Silver me? How many boxes of the should it buy from the wupper (Rount your credate cautations to deal) roof many Nothonos pasado Rage