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3 Check my 3.34 po D Wences Silven Industries, which manufactures and sells a highly successful line of summer lotions and insect repelents, as decided to diversity in order to stabilite sales throughout the year. A natural area for the company to consider is the production of reinos and creams to prevent dry and chapped skin Aer considerable research, a winter products line has been developed. However, Siven's president has decided to introduce only one of the new products for this coming winter. If the product is a success, further expansion in future years will be stated The product selected caled Chap-om is a lip balm that will be sold in a lipstick type tube. The product will be sold townolesalers in boxes of 24 tubes for $9 per box Because of excess capacity, no additional fed manufacturing overhead costs will be incurred to produce the product. However, a $99.000 charge for fored manufacturing overhead will be absorbed by the product under the company's absorption costing system Using the estimated sales and production of 110.000 boxes of Chap of the Accounting Department has developed the following manufacturing cost per box Direct material 14.00 Direct labor 2.40 antatering overheat SO Totales 10.00 The costs above relate to making both the lip balm and the tube that contains it. As an alternative to making the tubes for Chap on Silven has approached a supplier to discuss the possibility of buying the tubes. The purchase price of the suppler's emoty ubes would be $145 per box of 24 tubes. If Silven Industries tops making the tubes and buy them from the outside suppleits dret labor and variable manufacturing overhead costs per box of Chap-Off would be reduced by and its direct materia would be reduced by 25% Required 1. Siven buys its tubes from the outside suppler how much of ts own Chap Off manufacturing costs per box will be able to avoid Hint You need to separate the manufacturing overhead of $160 per box that is shown above into a variable and fed components to derive the correct answer 2. What is the financial advantage disadvantages per box of Chap-on Sven buys its tubes from the outside ser? 3. What is the financial advantage disadvantage in total not per box Silver buys 10.000 boxes of tubes from the outer 4. Should Silven Industries make or buy the tubes? 5 What is the maximum price that Silven should be willing to pay the outside sople for a box of 24 us? na besed estimates show a sales volume of $2.000 bow of tubes. At the ule possibility of buying the tubes. The purchase price of the supplier's empty tubes would be $1.45 per box of 24 tubes. If Silven Industries stops making the tubes and buys them from the outside supplier, its direct labor and variable manufacturing overhead costs per box of Chap-Off would be reduced by 10% and its direct materials costs would be reduced by 25% ook Required: 1. If Silven buys its tubes from the outside supplier, how much of its own Chap-off manufacturing costs per box will it be able to avoid? (Hint: You need to separate the manufacturing overhead of $1.60 per box that is shown above into its variable and fixed components to derive the correct answer.) 2. What is the financial advantage (disadvantage) per box of Chap Offif Silven buys its tubes from the outside supplier? 3. What is the financial advantage (disadvantage) In total (not per box) i Silven buys 110,000 boxes of tubes from the outside supplier? 4. Should Silven Industries make or buy the tubes? 5. What is the maximum price that Silven should be willing to pay the outside supplier for a box of 24 tubes? 6. Instead of sales of 110,000 boxes of tubes, revised estimates show a sales volume of 132,000 boxes of tubes. At this higher sales volume, Silven would need to rent extra equipment at a cost of $42.000 per year to make the additional 22,000 boxes of tubes. Assuming that the outside supplier will not accept an order for less than 132,000 boxes of tubes, what is the financial advantage (disadvantage) in total (not per box) if Silven buys 132,000 boxes of tubes from the outside supplier? Given this new information should Silven Industries make or buy the tubes? 7. Refer to the data in Required 6. Assume that the outside supplier will accept an order of any size for the tubes at a price of $145 per box. How many boxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier? rint rences Complete this question by entering your answers in the tabs below. Req7 Reg 6 Reg 4 Regs Reg 1 Reg 2 Reg 3 If Silven buys its tubes from the outside supplier, how much of its own Chap-off manufacturing costs per box will it be able to avoid? (Hint: You need to separate the manufacturing overhead of $1.60 per box that is shown above into its variable and fixed components to derive the correct answer.) (Do not round intermediate calculations. Round your answer to 2 decimal

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