Question

I need help with B, thank you!

Allen Corporation currently makes the nylon convertible top for its main product, a fiberglass boat designed especially for water sking The costs of producing the 1,500 tops needed each year follow Nylon fabric $300,000 Aluminum tubirg Frame fngs 96000 24.000 Direct labor 162,000 Variable manufacturing overtead 30,000 Fixed manufacturing overhead 152,000 Dustin Company, a specialty fabricator of synthetic materials, can make the needed tops of comparable quality for $430 each, FO.8. shipping point. Allen would furnish its own trademark insignia at a unit cost of $16. Transportation in would be $28 per unit, paid by Allen Corporation. Allen's chief accountant has prepared a cost analysis that shows that only 20% of fixed overhead could be avoided if the tops are purchased. The tops have been made in a remote section of Allen's factory building, using equipment for which no alternate use is apparent in the foreseeable future. a. Prepare a differential analysis showing whether or not you would recommend that the covertible tops be purchased from Dustin Company If appropriate, use a negative sign with your answer to represent a net disadvantage answer. Do not use negative signs with any other answers. Make or Buy Differential Analysis S 711.000 Cost to purchasetops Costs avoided by purchasingtops $ 420.000 162,000 Direct manerias Direct labor Variable manufacturing overhead Fined manufacturing overhead Net advantage (disadvantagej to purchase alternative 30.000 30,400 642.400 $008,600 b. Assuming that the production capacity released by purchasing the tops could be devoted to a subcortracting job for another company that netted a contribution purchase price could Allen Corporation pay for the tops? Round answer to two decimal places, if applicable. margin of $52.100, what maximum $ 463

Answer 1

419

Mayımum Purchase Price Addihonal Testina 430+52100- 1500 52100-68bo0 430 + 15 00 4 30 +E1)