Zachary Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Zachary produces a relatively small amount (14,000 units) of the cream and is considering the purchase of the product from an outside supplier for $6.10 each. If Zachary purchases from the outside supplier It would continue to sell and distribute the cream under its own brand name Zachary's accountant constructed the following profitability analysis Revenue (14,eee units $12.50) Unit-level materials costs (14,000 units $1.20) Unit-level labor costs (14,000 units X $8.60) Unit-level overhead costs (14,000 $0.50) Unit-level selling expenses (14.020 $0.40) Contibution margin skin crean production supervisor's salary Allocated portion of facility-level costs Product-level advertising cost Contribution to company-wide Income $175,000 (16,800) (8.400 (7.000 (5,600 137,200 (64,000) (13,100) (46,000) $ 14,100 Required a. Identify the cost Items relevant to the make-or-outsource decision b. What is the avoidable cost per unit of the outsourcing decision is taken? Should Zachary continue to make the product or buy it from the suppiler? Suppose that Zachary is able to increase sales by 14.000 units (sales will increase to 28.000 units). Calculate the total avoidable costs. At this level of production should Zachary make or buy the cream? Complete this question by entering your answers in the tabs below. Required a Required Recured Identify the cost items relevant to the male-or-outsource decision Total avoidable costs Required a > Zachary Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging, Zachary produces a relatively small amount (14,000 units) of the cream and is considering the purchase of the product from an outside supplier for $6.10 each. If Zachary purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Zachary's accountant constructed the following profitability analysis Revenue (14,000 units $12.50) Unit-level materials costs (14,000 units $1.20) Unit-level labor costs (14,200 units $0.60) Unit-level overhead costs (14,000 $0.50) Unit-level selling expenses (14,000 $0.40) Contribution margin Skin cream production supervisor's salary Allocated portion of facility-level costs Product-level advertising cost Contribution to company wide Income $175,000 (16,800) (8,400) (7.600) (5.00) 137,200 (64.600) (13,100 (46,000) $ 14,100 Required a. Identify the cost items relevant to the make-or-outsource decision b. What is the avoidable cost per unit if the outsourcing decision is taken? Should Zachary continue to make the product or buy it from the supplier Suppose that Zacharys able to increase sales by 14.000 units (sales will increase to 28,000 units) Calculate the total avoidable costs. At this level of production should Zachary make or buy the cream? Complete this question by entering your answers in the tabs below. Required Red Required What is the avoidable cost per unit if the outsourcing decision is taken? Should Zachary continue to make the product or buy t from the supplier? 'Round your answer to 2 bedral places) perund Total sable Sheld Zachary continue to make the product or buy on the super
