You answered a question for liverpoo87 October 2013 called outsourcing make or buy. I have a similar problem but with 3 required questions it looks just alike it can you review mind and answer the questions accurately. I will upload the question.
Outsourcing (Make-or Buy) Decision Mountain Air Limited manufactures a line of room air purifiers. Management is currently evaluating the possible production of an air purifier for automobiles. Based on an annual volume of 10,000 units, the predicted cost per unit of an auto air purifier follows. Direct materials......................... $8.00 Direct labor......................................1.50 Factory overhead............................7.00 Total................................................$16.50 The cost predictions include $50,000 in fixed factory overhead averaged over 10,000 units. The completed air purifier units include a battery operated electric motor, which Mountain air assembles with parts purchased from an outside vendor for $2.00 per motor. Mini Motor Company has offered to supply an assembled battery-operated motor at a cost of $5.00 per unit, with a minimum annual order of 5,000 units. If Mountain air accepts this offer, it will be able to reduce the variable labor and variable overhead costs of the auto air purifier by 50 percent. Required (a.) Determine whether Mountain Air should continue to make the electric motor or outsource it from Mini Motor Company.(Analyze the relevant costs of making the \"motors\" not the entire air purifier.) the net cost of outsourcing equals 12,500. Answer: (b.) If it could otherwise rent the motor-assembly space for $20,000 per year, should it make or outsource this component? Net benefit of outsourcing = 165,000 - 157,500 = 7500 Answered: This possibility seems more cost efficient to outsource. (c.) Answer: What additional factors should it consider in deciding whether to make or outsource the electric motors? I feel it should consider the total cost to make or buy a product per unit. Outsourcing (Make-or Buy) Decision Mountain Air Limited manufactures a line of room air purifiers. Management is currently evaluating the possible production of an air purifier for automobiles. Based on an annual volume of 10,000 units, the predicted cost per unit of an auto air purifier follows. Direct materials......................... $8.00 Direct labor......................................1.50 Factory overhead............................7.00 Total................................................$16.50 The cost predictions include $50,000 in fixed factory overhead averaged over 10,000 units. The completed air purifier units include a battery operated electric motor, which Mountain air assembles with parts purchased from an outside vendor for $2.00 per motor. Mini Motor Company has offered to supply an assembled battery-operated motor at a cost of $5.00 per unit, with a minimum annual order of 5,000 units. If Mountain air accepts this offer, it will be able to reduce the variable labor and variable overhead costs of the auto air purifier by 50 percent. Required (a.) Determine whether Mountain Air should continue to make the electric motor or outsource it from Mini Motor Company.(Analyze the relevant costs of making the \"motors\" not the entire air purifier.) the net cost of outsourcing equals 12,500. Answer: (b.) If it could otherwise rent the motor-assembly space for $20,000 per year, should it make or outsource this component? Net benefit of outsourcing = 165,000 - 157,500 = 7500 Answered: This possibility seems more cost efficient to outsource. (c.) Answer: What additional factors should it consider in deciding whether to make or outsource the electric motors? I feel it should consider the total cost to make or buy a product per unit. Outsourcing (Make-or Buy) Decision Mountain Air Limited manufactures a line of room air purifiers. Management is currently evaluating the possible production of an air purifier for automobiles. Based on an annual volume of 10,000 units, the predicted cost per unit of an auto air purifier follows. Direct materials......................... $8.00 Direct labor......................................1.50 Factory overhead............................7.00 Total................................................$16.50 The cost predictions include $50,000 in fixed factory overhead averaged over 10,000 units. The completed air purifier units include a battery operated electric motor, which Mountain air assembles with parts purchased from an outside vendor for $2.00 per motor. Mini Motor Company has offered to supply an assembled battery-operated motor at a cost of $5.00 per unit, with a minimum annual order of 5,000 units. If Mountain air accepts this offer, it will be able to reduce the variable labor and variable overhead costs of the auto air purifier by 50 percent. Required (a.) Determine whether Mountain Air should continue to make the electric motor or outsource it from Mini Motor Company.(Analyze the relevant costs of making the \"motors\" not the entire air purifier.) the net cost of outsourcing equals 12,500. Answer: (b.) If it could otherwise rent the motor-assembly space for $20,000 per year, should it make or outsource this component? Net benefit of outsourcing = 165,000 - 157,500 = 7500 Answered: This possibility seems more cost efficient to outsource. (c.) Answer: What additional factors should it consider in deciding whether to make or outsource the electric motors? I feel it should consider the total cost to make or buy a product per unit
