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anygoal [31]
3 years ago
14

You are consulting a company that manufactures cell phones. ​ Currently, the company manufactures all portions of the cell phone

internally for​ $22 per unit​ ($6.85 of direct​ materials, $11.74 of direct​ labor, and​ $3.41 of fixed manufacturing​ overhead). ​However, the company is considered outsourcing one part of the​ phone, its circuit​ board, to an outside supplier. The supplier quoted a price of​ $4.50 per circuit board. If the company accepts the​ supplier's offer, it is estimated that the total direct materials costs would be reduced by​ 20% and total direct labor costs would be reduced by​ 15%.
a)If the company decides to outsource the circuit​ board, the total cost of the cell phone is $ per unit.​ (Round to the nearest​ cent.)(Show calculations)

b)Should the company you are consulting accept the outside​ supplier's offer? why or why not?

c)The maximum price per circuit board that the company should be willing to pay the outside supplier is ​$ (Round to the nearest​ cent.)(Show calculations)
Business
1 answer:
stepladder [879]3 years ago
6 0

Answer:

Instructions are listed below

Explanation:

We are provided with the following information:

Unitary manufacturing cost= 6.85 + 11.74 + 3.42= $22

Outsource circuit board:

$4.50 per circuit board

-20% direct material

-15% direct labor

A) Unitary cellphone cost= (6.85*0.80)+(11.74*0.85)+ 3.42 + 4.5= $23.38

B) The company shouldn't accept the supplier's offer because it increases its costs.

C) The maximum price will be the one that equals in house production cost with outsourcing cost.

22=  (6.85*0.80)+(11.74*0.85)+ 3.42 + Price

Price= 22-   (6.85*0.80) - (11.74*0.85) - 3.42

Price= $3.12

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