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kap26 [50]
3 years ago
9

E25-18 Making outsourcing decisions Cool Systems manufactures an optical switch that it uses in its final product. The switch ha

s the following manufacturing costs per unit: Direct materials $5.00 Direct labor 3.00 Variable overhead 6.00 Fixed overhead 7.00 Manufacturing product cost $21.00 Another company has offered to sell Cool Systems the switch for $15.00 per unit. If Cool Systems buys the switch from the outside supplier, the idle manufacturing facilities cannot be used for any other purpose, yet none of the fixed costs are avoidable. Prepare an outsourcing analysis to determine whether Cool Systems should make or buy the switch. Miller-Nobles, Tracie. Horngren's Accounting (p. 1447). Pearson Education. Kindle Edition.
Business
1 answer:
Vikentia [17]3 years ago
7 0

Answer:

From a cost savings perspective the switch should be made in-house

Explanation:

In deciding whether Cool Systems should make or buy the switch , we calculate the relevant applicable to  both situations,then compare t see which option saves costs.

The cost of making the switch is calculated thus:

Direct materials per unit      $5

Direct labor                           $3

Variable overhead                <u>$6</u>

Total relevant cost               <u> $14</u>    

The cost of purchasing the switch from another supplier is $15

From the above analysis, it is preferable to make the switch in-house as that option saves $1($15-$14) per switch.

However, it might be that we need to look beyond cost savings sometimes,purchasing the switch from another supplier might be viable if the quality of the outside switch is better or that the outside supplier can deliver in timely fashion.      

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Answer:

First blank: Consumers

Second blank: GDP

Third blank: CPI

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The Consumer Price Index is used to measure the basic basket of services and goods that a normal person often buys in order to have a decent quality of life, the GDP includes all goods and services produced, for example all the office equipment, or farm equipment that was produced by a countries economy, the average customer doesn´t need farm equipment nor office equipment that is why it is not taken into account in the Costumer Price Index.

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Hello,

Your brainliest answer would be:

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3 years ago
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You are selling a product in an area where 30 % of the people live in the city and the rest live in the suburbs. Currently 20 %
irina1246 [14]

Answer:

a). I would adopt the increase in market share in the suburbs by 15 % since the number of final suburbs dwellers who will use my product is (0.0805 x) which is  greater than final city dwellers' (0.075 x)

b). The total percentage of people who are city dwellers who own your product before the new sales drive=46.15%

Explanation:

a). We can make the following expressions;

Total number of both city dwellers and suburb dwellers=x

City dwellers=30% of x=(30/100)×x=0.3 x

Suburb dweller=70% of x=(70/100)×x=0.7 x

Total number of city dwellers who use your product initially=(20/100)×0.3 x=0.06 x

Total number of suburb dwellers who use your product initially=(10/100)×0.7 x=0.07 x

If we increase the market share in the suburbs by 15%

Number of suburb dwellers=0.07 x+(15/100)×0.07 x

Number of suburb dwellers=(0.07 x+0.0105 x)=0.0805 x

If we increase market share in the city by 25%

Number of city dwellers=0.06 x+(25/100)×0.06 x

Number of city dwellers=(0.06 x+0.015 x)=0.075 x

I would adopt the increase in market share in the suburbs by 15 % since the number of final suburbs dwellers who will use my product is (0.0805 x) which is  greater than final city dwellers' (0.075 x)

b). Percentage of city dwellers that own your product

Percentage=(Initial number of city dwellers/Total number of people)×100

Percentage=0.06 x/(0.06 x+0.07 x)=(0.06 x/0.13 x)×100=46.15%

The total percentage of people who are city dwellers who own your product before the new sales drive=46.15%

8 0
3 years ago
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