Business, 24.11.2021 05:10 book0001

Company A makes downhill ski equipment. Assume that company B has offered to produce ski pole for company A for $18 per pair. Company A needs 100,000 pairs of poles per period. Company A can avoid $125,000 of fixed costs if it outsources; the remaining fixed costs are unavoidable. Company A currently has the following costs at a production level of 100,000 pairs of poles. Manufacturing Costs Total Cost Cost per pair
Direct Materials $750,000 $7.50
Direct Labor $80,000 $0.80
Variable MOH $520,000 $5.20
Fixed MOH $650,000 $6.50
Total $2,000,000 $20.00

Required:
Should company A outsource ski pole production if the next best use of freed capacity is to leave it idle?

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 01:50

Amanda rice has just arranged to purchase a $640,000 vacation home in the bahamas with a 20 percent down payment. the mortgage has a 7 percent apr compounded monthly and calls for equal monthly payments over the next 30 years. her first payment will be due one month from now. however, the mortgage has an eight-year balloon payment, meaning that the balance of the loan must be paid off at the end of year 8. there were no other transaction costs or finance charges. how much will amanda’s balloon payment be in eight years

Answers: 3

Answer

Business, 22.06.2019 09:30

Stock market crashes happen when the value of most of the stocks in the stock market increase at the same time. question 10 options: true false

Answers: 1

Answer

Business, 22.06.2019 15:30

Calculate the required rate of return for climax inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 5.0%, (4) the firm has a beta of 2.30, and (5) its realized rate of return has averaged 15.0% over the last 5 years. do not round your intermediate calculations.

Answers: 3

Answer

Business, 22.06.2019 19:30

Consider the following two projects. both have costs of $5,000 in year 1. project 1 provides benefits of $2,000 in each of the first four years only. the second provides benefits of $2,000 for each of years 6 to 10 only. compute the net benefits using a discount rate of 6 percent. repeat using a discount rate of 12 percent. what can you conclude from this exercise?

Answers: 3

Answer

You know the right answer?

Company A makes downhill ski equipment. Assume that company B has offered to produce ski pole for co...

Questions