Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
You are a financial manager for Zoom Corp., which manufactures bicycles. In the most recent fiscal year, Zoom manufactured and sold 20,000 bicycles. Wheels, seats,
You are a financial manager for Zoom Corp., which manufactures bicycles. In the most recent fiscal year, | ||||||
Zoom manufactured and sold 20,000 bicycles. Wheels, seats, and brake calipers are three components of | ||||||
the bicycles currently manufactured by Zoom. Three different vendors have proposed to provide those | ||||||
components to Zoom, and quoted prices (including shipping) for their delivery. Your task is to determine | ||||||
which, if any, of these proposals should be accepted. | ||||||
Prepare a make vs. buy incremental analysis for each possible course of action in an Excel worksheet. Your | ||||||
grade will be based on the correctness of your answers, as well as the use of Excel. That is, where possible, | ||||||
you should use formulas to get your answers, rather than keyed-in values. See your instructor for help with | ||||||
Excel basics if you need it. | ||||||
In a Word document, prepare a memo stating which of the proposals you suggest accepting, as well as the | ||||||
basis for your conclusions. Also identify any nonfinancial factors you should consider before accepting any | ||||||
of the outsourcing proposals. | ||||||
Attach both files to the Canvas assignment space by the due date of March 18th | ||||||
Below is cost data for Zoom's production of wheels, seats, and calipers. Outside suppliers have offered to | ||||||
provide wheels for $6.89, seats for $8.28, and calipers for $2.34 per piece. Both wheels and seats are branded | ||||||
with the Zoom logo, and that logo will need to be added at the Zoom factory at a cost of $0.50 each for any | ||||||
of these components that are outsourced. For all three components, 75% of the fixed costs are avoidable, and | ||||||
will be eliminated if the component's production is outsourced. In addition, seats and calipers are both | ||||||
produced out of the same small factory space. If both seats and calipers were outsourced, Zoom could lease | ||||||
the space out and increase net income by $20,000 per year, while eliminating all fixed costs for the two | ||||||
components. | ||||||
Wheels | Seats | Calipers | ||||
Cost category | ||||||
Direct materials | $138,500 | $53,500 | $87,500 | |||
Direct labor | 96,500 | 72,500 | 44,500 | |||
Variable overhead | 21,000 | 14,000 | 16,000 | |||
Fixed overhead | 63,400 | 37,200 | 30,200 | |||
Total cost | $319,400 | $177,200 | $178,200 | |||
Units produced | 40,000 | 20,000 | 80,000 | |||
Cost per unit | $7.99 | $8.86 | $2.23 |
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/669be2ec0e831_203669be2eb50f33.jpg)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started