Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Serendipity Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the
The Serendipity Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the following cost information about the costs of making CMCBs in 2020 and the expected costs in 2021:
Serendipity manufactured 5,000 CMCBs in 2020 in 25 batches of 200 each. In 2021, Serendipity anticipates needing 4,000 CMCBs. The CMCBs would be produced in 40 batches of 100 each. The Manson Corporation has approached Serendipity about supplying CMCBs to Serendipity in 2021 at $280 per CMCB on whatever delivery schedule Serendipity wants. Requirement 1. Calculate the total expected manufacturing cost per unit of making CMCBs in 2021. 1. Calculate the total expected manufacturing cost per unit of making CMCBs in 2021. 2. Suppose the capacity currently used to make CMCBs will become idle if Serendipity purchases CMCBs from Manson. On the basis of financial considerations alone, should Serendipity make CMCBs or buy them from Manson? Show your calculations. 3. Now suppose that if Serendipity purchases CMCBs from Manson, its best alternative use of the capacity currently used for CMCBs is to make and sell special circuit boards (CB3s) to the Electronic Corporation. Serendipity estimates the following incremental revenues and costs from CB3s: TotalexpectedincrementalfuturerevenuesTotalexpectedincrementalfuturecosts$2,400,000$2,520,000 On the basis of financial considerations alone, should Serendipity make CMCBs or buy them from Manson? Show your calculations
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started