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The Uniforever Corporation sells a lip balm called Fruity which is sold in a lipstick-type tube. The company manufactures both the empty tube and the
The Uniforever Corporation sells a lip balm called Fruity which is sold in a lipstick-type tube. The company manufactures both the empty tube and the lip balm that goes in the tube. The product will be sold to wholesalers in boxes of 200 tubes for $860 per box. Fixed costs of $872,000 will be allocated to this product. Expected sales and production volume is 87,200 boxes of Fruity. The following are the costs of production per box. Direct labor $220 per box Direct materials $320 per box Total overhead (variable and fixed) $170 per box Total $710 per box Uniforever Corporation has approached a supplier to discuss the possibility of purchasing empty tubes. The purchase price of the empty tubes from the supplier would be $160 per 200 tubes. If the Uniforever Corporation accepts the purchase proposal, it is estimated that direct labor and variable overhead costs would be reduced by 20% and direct material costs would be reduced by 30%. Do not enter dollar signs or commas in the input boxes. Do not use the negative sign. Round your answers to 2 decimal places. a) What is the variable overhead rate per box of Fruity? Total overhead rate per box: $Answer Fixed overhead allocated per box: $Answer Variable overhead rate per box: $Answer b) If the empty tubes are purchased, what is the total savings per box? Savings on direct labor: $Answer Savings on direct materials: $Answer Savings on variable overhead: $Answer Total savings per box: $
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