Solution 1:
Total manufacturing overhead per unit at 100000 boxes = $1.90 per unit
Fixed manufacturing overhead per unit = $80,000 / 100000 = $0.80 per unit
Variable manufacturing overhead per unit = $1.90 - $0.80 = $1.10 per unit
Reduction in Chap-Off manufacturing costs per box, if tubes purchased from outside vendor = (Direct labor cost per unit + Variable manufacturing overhead per unit) * 10% + Direct material cost per unit * 25%
= ($3.00 + $1.10)*10% + ($4.60*25%) = $1.56 per unit
Solution 2:
financial advantage (disadvantage) per box of Chap-Off if Silven buys its tubes from the outside supplier = $1.56 - $1.70 = ($0.14)
Solution 3:
Financial advantage (disadvantage) in total (not per box) if Silven buys 100,000 boxes of tubes from the outside supplier = -$0.14 * 100000 = ($14,000)
Solution 4:
As there is net financial disadvantage of $14000, therefore silven should make the tubes.
Solution 5:
Maximum price that Silven should be willing to pay the outside supplier for a box of 24 tubes is equal to its variable cost to make i.e. $1.56 per box
Solution 6:
Cost to make 125000 boxes = 125000*$1.56 + $45,000 = $240,000
Cost to buy 125000 boxes = 125000 * $1.70 = $212,500
Net financial advantage (disadvantage) of buying = $240,000 - $212,500 = $27,500
Therefore Silven Industreis should buy the tubes.
Solution 7:
If outside supplier will accept an order of any size for the tubes then silven industries should make 100000 tubes and buy 25000 boxes of tubes from outside supplier.
Silven Industries, which manufactures and sells a highly successful line of summer lotions and Insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural a...
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin After considerable research, a winter products line has been developed. However, Silven's president has decided to introduce only one of the new products for this coming winter. If the product...
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural...
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven’s president has decided to introduce only one of the new products for this coming winter. If the product...
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven’s president has decided to introduce only one of the new products for this coming winter. If the product...
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However Silven's president has decided to introduce only one of the new products for this coming winter. If the product...
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven’s president has decided to introduce only one of the new products for this coming winter. If the product...
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven’s president has decided to introduce only one of the new products for this coming winter. If the product...
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven’s president has decided to introduce only one of the new products for this coming winter. If the product...
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven’s president has decided to introduce only one of the new products for this coming winter. If the product...
Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to consider is the production of winter lotions and creams to prevent dry and chapped skin. After considerable research, a winter products line has been developed. However, Silven’s president has decided to introduce only one of the new products for this coming winter. If the product...