The Johnson Corporation manufactures cellular modems and routers in two divisions. The company currently manufactures the circuit board for the modems. The Smith Corporation, a reliable mnaufacturer, has offered to supply circuit boards to the modems division in 2018. Cost data is provided below. current year 2017 next year 2018 volume (# circuit boards produced) 80,000 93,000 $180.00 DM per circuit board $61.40 DL per circuit board avoidable fixed mfg OH per unit if circuit boards are purchased unavoidable fixed mfg OH per unit* $40.00 $50.00 Ms. Jones, salary of manager of circuit board production ** $95,000 salary of new manager of production in routers division ** $102,000 selling price to Johnson per circuit board $315.00 -2.4% expected decrease in DM costs in 2018 expected increase in DL costs in 2018 3.8% * This OH will be incurred whether the circuit boards are made or purchased. ** The salaries of two production managers must be considered. One is in the current manager in modems division (Ms. Jones), the other in the routers division. The job in the routers division is unfilled at this time. If the circuit boards continue to be manufactured in-house, Ms, Jones will continue in the job at her current salary of $95,000. In that case, the routers division will fill the job opening with a new hire at a salary of $102,000. If the circuit boards are purchased, then Ms. Jones will fill the vacancy in the routers division at the salary for that position, i.e. $102,000 (in other words, Ms. Jones will make $7,000 more per year if the circuit boards are purchased) Furthermore, If the circuit boards are purchased, then Johnson can use the facility to make other electronic components. Note that the unavoidable fixed manufacturing costs shown above will continue to be incurred. The accounting intern provided the details shown below. next year 2018 21,500 # units produced andold $65.25 selling price per unit variable costs per unit $8.50 $50.00 fixed costs per unit (from first data panel) $6.75 gross profit per unit Complete the following template for the make vs buy decision. This must be done on a per unit basis. (12 points) Part 2 for this problem is shown in row 98 make buy points DM DL purchase price avoidable fixed mfg cost unavoidable fixed mfg cost production manager's salary sale of other electronic components total per unit cost to make or buy A B G G 151 [a] show your work for DM cost 52 53 54 55 56 57 58 59 [b] show your work for DL cost 60 61 62 63 64 65 [d] show your work for avoidable fixed mfg OH 66 67 68 69 70 71 le) show your work for unavoidable fixed mtg OH 72 [f] show your work for the production managers salaries [g] show your work for the sale of other electronic components (2) Calculate the number of units that need to be sold/produced in 2018 so that the cost to make is equal to the cost to buy? (4 points) The Johnson Corporation manufactures cellular modems and routers in two divisions. The company currently manufactures the circuit board for the modems. The Smith Corporation, a reliable mnaufacturer, has offered to supply circuit boards to the modems division in 2018. Cost data is provided below. current year 2017 next year 2018 volume (# circuit boards produced) 80,000 93,000 $180.00 DM per circuit board $61.40 DL per circuit board avoidable fixed mfg OH per unit if circuit boards are purchased unavoidable fixed mfg OH per unit* $40.00 $50.00 Ms. Jones, salary of manager of circuit board production ** $95,000 salary of new manager of production in routers division ** $102,000 selling price to Johnson per circuit board $315.00 -2.4% expected decrease in DM costs in 2018 expected increase in DL costs in 2018 3.8% * This OH will be incurred whether the circuit boards are made or purchased. ** The salaries of two production managers must be considered. One is in the current manager in modems division (Ms. Jones), the other in the routers division. The job in the routers division is unfilled at this time. If the circuit boards continue to be manufactured in-house, Ms, Jones will continue in the job at her current salary of $95,000. In that case, the routers division will fill the job opening with a new hire at a salary of $102,000. If the circuit boards are purchased, then Ms. Jones will fill the vacancy in the routers division at the salary for that position, i.e. $102,000 (in other words, Ms. Jones will make $7,000 more per year if the circuit boards are purchased) Furthermore, If the circuit boards are purchased, then Johnson can use the facility to make other electronic components. Note that the unavoidable fixed manufacturing costs shown above will continue to be incurred. The accounting intern provided the details shown below. next year 2018 21,500 # units produced andold $65.25 selling price per unit variable costs per unit $8.50 $50.00 fixed costs per unit (from first data panel) $6.75 gross profit per unit Complete the following template for the make vs buy decision. This must be done on a per unit basis. (12 points) Part 2 for this problem is shown in row 98 make buy points DM DL purchase price avoidable fixed mfg cost unavoidable fixed mfg cost production manager's salary sale of other electronic components total per unit cost to make or buy A B G G 151 [a] show your work for DM cost 52 53 54 55 56 57 58 59 [b] show your work for DL cost 60 61 62 63 64 65 [d] show your work for avoidable fixed mfg OH 66 67 68 69 70 71 le) show your work for unavoidable fixed mtg OH 72 [f] show your work for the production managers salaries [g] show your work for the sale of other electronic components (2) Calculate the number of units that need to be sold/produced in 2018 so that the cost to make is equal to the cost to buy? (4 points)