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The Wharton Company produces chairs. This year's expected production is 30,000 units. Currently, Wharton makes the upholstery for the chairs in its factory. Wharton's
The Wharton Company produces chairs. This year's expected production is 30,000 units. Currently, Wharton makes the upholstery for the chairs in its factory. Wharton's management accountant reports the following costs for the upholstery for the 30,000 chairs: (Click to view the information.) Wharton has received an offer from an outside vendor to supply the upholstery for the chairs Wharton requires at $11.00 per chair. Read the requirements. Requirement 1. Assume that if the outside vendor supplies the upholstery, the facility where the upholstery is currently made will remain idle. On the basis of financial considerations alone, should Wharton accept the outside vendor's offer at the anticipated volume of 30,000 chairs? Show your calculations. (If an input field is not used in the table, leave the input field empty; do not enter a zero.) Relevant Costs Make Buy Total relevant costs On the basis of financial considerations alone, should Wharton accept the outside vendor's offer at the anticipated volume of 30,000 chairs? accept the outside vendor's offer at the anticipated volume of 30,000 chairs. Wharton Requirement 2. For this question, assume that if the upholstery is purchased outside, the available unused facilities will be used to make pillows to match the chairs. Each pillow costs $25 with a variable cost of $19. No other costs would change and the company expects to sell 10,000 pillows. On the basis of financial considerations alone, should Wharton make or buy the upholstery for their chairs, assuming that 30,000 chairs are produced (and sold)? Show your calculations. (Enter any deductions with a parentheses or a minus sign. If an input field is not used in the table, leave the input field empty; do not enter a zero.) Relevant Costs Total relevant costs Make Buy
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