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28 Sep 2019
Sports Equipment Unlimited makes and sells soccer goals and hassales of 20,000 units per year. The plant is operating at fullcapacity.
A potential supplier has approached Sports Equipment Unlimited andoffered to supply the soccer goals at a finished cost of$31.50
per goal. If the company buys rather than manufactures, they willbe able to eliminate 60% of fixed manufacturing costs byleasing
unused space. The current costs are as follows:
Per Unit Direct Labor 200,000 10.00 Direct Materials 247,000 12.35 Variable Manufacturing Overhead 60,000 3.00 Fixed Manufacturing Overhead 170,000 8.50 Total Manufacturing Cost 677,000 33.85
INSTRUCTIONS:
Prepare an incremental analysis for the decisions to make or buythe soccer goals.
Show the cost of continuing to make and to buy the goals. Show theeffect on net
income if they buy. Should Sports Equipment Unlimited buy thegoals?
Sports Equipment Unlimited makes and sells soccer goals and hassales of 20,000 units per year. The plant is operating at fullcapacity.
A potential supplier has approached Sports Equipment Unlimited andoffered to supply the soccer goals at a finished cost of$31.50
per goal. If the company buys rather than manufactures, they willbe able to eliminate 60% of fixed manufacturing costs byleasing
unused space. The current costs are as follows:
| Per Unit | ||
| Direct Labor | 200,000 | 10.00 |
| Direct Materials | 247,000 | 12.35 |
| Variable Manufacturing Overhead | 60,000 | 3.00 |
| Fixed Manufacturing Overhead | 170,000 | 8.50 |
| Total Manufacturing Cost | 677,000 | 33.85 |
INSTRUCTIONS:
Prepare an incremental analysis for the decisions to make or buythe soccer goals.
Show the cost of continuing to make and to buy the goals. Show theeffect on net
income if they buy. Should Sports Equipment Unlimited buy thegoals?
Hubert KochLv2
28 Sep 2019
Related questions
| Make-Versus-Buy Decision | ||||||
| Sports Equipment Unlimitedmakes and sells soccer goals and has sales of 20,000 units peryear. The plant is operating at full capacity. | ||||||
| A potential supplier hasapproached Sports Equipment Unlimited and offered to supply thesoccer goals at a finished cost of $31.50 | ||||||
| per goal. If the company buysrather than manufactures, they will be able to eliminate 60% offixed manufacturing costs by leasing | ||||||
| unused space. The current costs are asfollows: | ||||||
| Per Unit | ||||||
| Direct labor | 200,000 | 10.00 | ||||
| Direct materials | 247,000 | 12.35 | ||||
| Variable manufacturing overhead | 60,000 | 3.00 | ||||
| Fixed manufacturing overhead | 170,000 | 8.50 | ||||
| Total manufacturing cost | 677,000 | 33.85 | ||||
| INSTRUCTIONS: | ||||||
| Prepare an incrementalanalysis for the decisions to make or buy the soccer goals. | ||||||
| Show the cost of continuing tomake and to buy the goals. Show the effect on net | ||||||
| income if they buy. ShouldSports Equipment Unlimited buy the goals? | ||||||
| Make-Versus-Buy Decision | ||||||
| Sports Equipment Unlimitedmakes and sells soccer goals and has sales of 20,000 units peryear. The plant is operating at full capacity. | ||||||
| A potential supplier hasapproached Sports Equipment Unlimited and offered to supply thesoccer goals at a finished cost of $31.50 | ||||||
| per goal. If the company buysrather than manufactures, they will be able to eliminate 60% offixed manufacturing costs by leasing | ||||||
| unused space. The current costs are asfollows: | ||||||
| Per Unit | ||||||
| Direct labor | 200,000 | 10.00 | ||||
| Direct materials | 247,000 | 12.35 | ||||
| Variable manufacturing overhead | 60,000 | 3.00 | ||||
| Fixed manufacturing overhead | 170,000 | 8.50 | ||||
| Total manufacturing cost | 677,000 | 33.85 | ||||
| INSTRUCTIONS: | ||||||
| Prepare an incrementalanalysis for the decisions to make or buy the soccer goals. | ||||||
| Show the cost of continuing tomake and to buy the goals. Show the effect on net | ||||||
| income if they buy. ShouldSports Equipment Unlimited buy the goals? | ||||||
Week 6 #2
| Make-Versus-Buy Decision | |||
| Sports Equipment Unlimitedmakes and sells soccer goals and has sales of 20,000 units peryear. The plant is operating at full capacity. | |||
| A potential supplier hasapproached Sports Equipment Unlimited and offered to supply thesoccer goals at a finished cost of $31.50 | |||
| per goal. If the company buysrather than manufactures, they will be able to eliminate 60% offixed manufacturing costs by leasing | |||
| unused space. The current costs are asfollows: | |||
| Per Unit | |||
| Direct labor | 200,000 | 10.00 | |
| Direct materials | 247,000 | 12.35 | |
| Variable manufacturing overhead | 60,000 | 3.00 | |
| Fixed manufacturing overhead | 170,000 | 8.50 | |
| Total manufacturing cost | 677,000 | 33.85 | |
| INSTRUCTIONS: | |||
| Prepare an incrementalanalysis for the decisions to make or buy the soccer goals. | |||
| Show the cost of continuing tomake and to buy the goals. Show the effect on net | |||
| income if they buy. ShouldSports Equipment Unlimited buy the goals? | |||
