Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tarr manages a local camping equipment store, where the top-selling sleeping bag brings in $5,000 of contribution margin for the company each month. The business

Tarr manages a local camping equipment store, where the top-selling sleeping bag brings in $5,000 of contribution margin for the company each month. The business currently manufactures these sleeping bags, but it's considering an option to outsource. The company's contribution margin will go down to $2,500 next month for the sleeping bags category if Tarr decides to purchase from the supply instead of manufacturing in-house. If he decides to buy instead of make, there will be available capacity for other products. By one estimate, $4,000 in new monthly contribution margin could be generated with that available space. Others believe that the estimated $4,000 new contribution margin is optimistic.
Using excel goal seek, 

Determine how small the new contribution margin amount can be so that the "buy" option is equally attractive as the "make" option.

Step by Step Solution

3.36 Rating (152 Votes )

There are 3 Steps involved in it

Step: 1

To determine how small the new contribution margin amount can be so that the buy option is equally a... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Horngrens Financial and Managerial Accounting

Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura

5th edition

9780133851281, 013385129x, 9780134077321, 133866297, 133851281, 9780133851298, 134077326, 978-0133866292

More Books

Students also viewed these Accounting questions

Question

Which subject does Corporate social responsibility belong to?

Answered: 1 week ago