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 chapped skin After considerable research, a winter products line has been developed. However, Silver's president has decided to introduce only one of the new products for this coming winter. If the product is 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 of 24 tubes for $9 per box Because of excess capacity, no additional fixed manufacturing overhead costs will be incurred to produce the product . However, a $116,000 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 145,000 boxes of Chap-Off the Accounting Department has developed the following manufacturing cost per box Direct material Direct Labor Manufacturing overhead Total cost 53.90 2.20 1.70 $7.50 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 On Siven hos approached a supplier to discuss the possibility of buying the tubes. The purchase price of the supplier's empty tubes would be $165 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 10% and its direct materials costs would be reduced by 30% Required: 1 Silven buys 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 Of Silven buys its tubes from the outside supplier? 3. What is the financial advantage (disadvantage) in total (not per box) i Silven buys 145.000 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 145,000 boxes of tubes, revised estimates show a sales volume of 179,000 boxes of tubes. At this higher sales volume, Silven would need to rent extra equipment of a cost of $60,000 per year to make the additional 34,000 boxes of tubes Assuming that the outside supplier will not accept an order for less than 179.000 boxes of tubes, what is the financial advantage (disadvantage in total (not per box if Silven buys 179,000 boxes of tubes from the outside supplier? Given this new information, should Stiven 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 size for the tubes at a price of $165 per box How many boxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier? Complete this question by entering your answers in the tobs below. Req Rea 2 Reg 3 Reg 4 Rog 5 Rogo Red if Silver buys its tubes from the outside supplier, how much of its own chap Off manufacturing costs per box will it be able to Avold? (Hinti You need to separate the manufacturing overhead of $170 per box that is shown above into its variable and fixed components to drive the correct answer. (Do not found intermediate calculations Hound your answer to 2 decimal places) Avoldable manufacturing costs per box ol Chapon Req2 > this 11 Reg 1 Reg 2 Req3 Reg 4 Reg 5 Reg 6 Reg 7 What is the financial advantage (disadvantage) per box of Chap-off if Silven buys its tubes from the outside supplier? (Do not round intermediate calculations. Round your answer to 2 decimal places.) per box Ter to the data in Required 6. Assume that the outside supplier will accept an order of any size for the tubes at a price o box. How many boxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Req 7 What is the financial advantage (disadvantage) in total (not per box) if Silven buys 145,000 boxes of tubes from the outside supplier? Complete this question by entering your answers in the tabs below. Reg 5 Req6 Req 7 Reg 1 Req2 Reg 3 Reg 4 N Should Silven Industries make or buy the tubes? Make OBuy Reqi Reg 2 Reg 3 Reg 4 Rea SR Reg 6 Req 7 What is the maximum price that Silven should be willing to pay the outside supplier for a box of 24 tubes? (Do not intermediate calculations, Round your answer to 2 decimal places.) Maximum price per box & Reqa Req6 > Instead of sales of 145,000 boxes of tubes, revised estimates show a sales volume of 179,000 boxes of tubes. At this higher sales volume, Silven would need to rent extra equipment at a cost of $60,000 per year to make the additional 34,000 boxes of tubes. Assuming that the outside supplier will not accept an order for less than 179,000 boxes of tubes, what is the financial advantage (disadvantage) in total (not per box) if Silven buys 179,000 boxes of tubes from the outside supplier? Given this new information, should Silven Industries make or buy the tubes? Show less Make or buy the boxes of tubes? & Req 5 Req7 > Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Req 7 Refer to the data in Required 6. Assume that the outside supplier will accept an order of any size for the tubes at a price of $1,65 per box. How many boxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier? (Round your intermediate calculations to 2 decimal places.) Number of boxes of tubes manufactured by Silven Number of boxes of tubes purchased from the outside supplier