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Fynjy0 [20]
3 years ago
14

The Water Sports Company soon will be producing and marketing a new model line of motor boats. The production manager, Michael J

ensen, now is facing a make-or-buy decision regarding the outboard motor to be installed on each of these boats. Based on the total cost involved, should the motors be produced internally or purchased from a vendor? Producing them internally would require an investment of $1.5 million in new facilities as well as a production cost of $1,600 for each motor produced. If purchased from a vendor instead, the price would be $2,000 per motor. Michael has obtained a preliminary forecast from the company’s marketing division that 4,000 boats in this model line will be sold.
Analyze Michael’s two options. Which option should be chosen?

A. At a production point of 4000 units, Michael should choose to invest in making the boat motors in house. The total cost if he produces the motors is $7,900,000, while if he decides to buy he will pay $8,000,000.

B. Michael realizes from past experience that preliminary sales forecasts are quite unreliable, so he wants to check on whether his decision might change if a more careful forecast differed significantly from the preliminary forecast. Determine a break-even point for the production and sales volume below which the buy option is better and above which the make option is better.

The break even –point is 3.750 units. Until it reaches a 3750 production point (Q< 3750) the costs are minimized if the motors are bought from the vendor instead of producing them. If the company makes above boats 3750 (Q>3750) it is better to invest into making their own motors.
Business
1 answer:
Licemer1 [7]3 years ago
4 0

Answer:

Explanation:

X - number of units sold

Total cost for production = 1,500,000 + 1600X

Total cost for purchasing = 2000X

a.  For 4000 units sold

Total cost for production = 1,500,000 + 1600 * 4000 = $7,900,000

Total cost for purchasing = 2000* 4000 =  $8,000,000

In this case producing is cheaper. Therefore, it is better to produce

b. Y - break-even point

Then :  1,500,000 + 1600 * Y = 2000* Y

So 1,500,000 = 400 Y

Y = 3750

At №of units less than 3750 purchasing will be the better option

And above 3750 producing will be the better option

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Answer:

Company HD pays less in taxes

Explanation:

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Therefore the above represent the answer

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5 0
3 years ago
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Because it was right

6 0
3 years ago
On November 1, 2015, Elli Company declared a dividend of $3.00 per share. Elli Company has 20,000 shares of common stock outstan
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Answer:

Option (b) is correct.

Explanation:

The Journal entries are as follows:

(i) On November 1, 2015

Retained Earnings [$3 × 20,000] A/c    Dr. $60,000

To Dividend Payable                                                   $60,000

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3 years ago
An example of a stressor at the group level is
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An example of a stressor at the group level is an excessive job demands. The Option A is correct.

<h3>What is a stressor in group?</h3>

Also known as an interpersonal demands, means the pressures created by other employees. A group related stressors does include some factors like conflicts, poor communication, unpleasant relationship as well as fear of being ostracized from the group as a valued member.

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5 0
1 year ago
A government bond issued in France has a coupon rate of 5% (paid annually) and a face value of 100 euros, and it matures in 5 ye
Nina [5.8K]

Answer:

Bond Price​= 106.77

Explanation:

Giving the following information:

Face value= 100

Coupon= 100*0.05= 5

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<u>To calculate the price of the bond, we need to use the following formula:</u>

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8 0
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