Question

Jordan Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an inexpensive calculator. The company's chief accountant recently prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calculators is between 37,000 and 71,000 units per year. $ 418,000 Revenue (38,000 units * $11.00) Unit-level variable costs Materials cost (38,000 × $3.00) Labor cost (38,000 $2.00) Manufacturing overhead (38,000 x $0.10) Shipping and handling (38,000 * $0.25) Sales commissions (38,000 × $2.00) Contribution margin Fixed expenses Advertising costs Salary of production supervisor Allocated company-wide facility-level expenses Net loss (114,000) (76,000) (3,800) (9,500) (76,000) 138,700 (27,000) (67,000) (82,000) $ (37,300)

Answer 1

Here I am going to answer first 4 parts you asked.
A.Calculation of contribution margin and decision-related to accapt or reject the offer

A. Statement at ooo units calculation Contribution margin * Discount Store will Fhowing pary your calcul → Total variable cost for malding Calubtoss af $ 5.60/unit calculator : $ 3.00 Material Colt Labour cost $ 2.00 Manufacturing overhead $0.10 $0.25 Cost shiping & handling Total $5.35 Con toibution margin = Revenue - variable cost = $5.60 - $5.35 => $0.25/unit Comment If Jordon takes his decision on the of quantitative fector alone, I suggest to Jordan, that he should not accapt the offer due to high fixed cost Expenses. If Jordan sells 38000 units, his Contribution would be $5.65 basis

b-1 Calculation of total cost for jordan to make or buy 38000 calculators

b-1 Calculation of 었 total cost for Jordan to make and buy 30000 calculators. As Given in the question, Af Jordan makes Unit - Level variable cost at 38000 units Material cost ( 38000 *$3.00) - 114000 Labour Cost x 2.00) 76000 Manufacturing overhead (3800 v. *20.10),= 3800 *$0:251 9500 handling Colt (38000 Sales Commission (38000 X$02.00 ) 76000 Total variable cost $ 279300 (38000 Shiping 27000 67000 82000 Fixed cost Advertising costs Salary of production supervisor Allocated Company - wide total fixed cost $176000 Hence, Total cost if Jondan makes the calculator would be $455300 Cei $279300 + $176000)


b-2 and b-3

38000 units calculation of total cost of Jordan buy Jeron uits Competitor Calculator's buying cost a 38000 X$6.30 1 Add fixed Expenses $239400 $176000 Total cost $ 415 400 b-2 Jordan can buy the calculators due Decorease es variable colt and Increase in profit. to b3, the sales volume is increared to y flooo, then Jordan can make the calculaton and as well as can buy the calculators due to Ancurease in prelfit. mose prefarable is buy. Variable Cestimating calculation : $7-36 lunit Variable cost of buying calculaton $6.30 fumit. Hence, Jordan should buy the calculators due to lower of vachicable cost at loud units