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ass S x Week 5 Part 11 x Yuzu: Managerix Make-or-Buy DX trig.pdf x + 875723/cf/3471/4/[email protected]:7.10 a Amazon.com: Onlin... YouTube Wanikani/Dashbo... N Netflix SSO-PROD-Group 1... Exercises: Set B 39. Make-or-Buy Decision. Ocean Products, Inc, currently manufactures its own surfboards for customers. Management is interested in outsourcing production of these surfboards to a reputable manufacturing company that can supply the surfboards for $80 per unit Ocean Products, Inc, incurs the following annual production costs to produce 10,000 surfboards internally. Total Annual Cost at 10,000 Units Per Unit $20 10 30 $200,000 100,000 300,000 Variable production costs Direct materials Direct labor Manufacturing overhead Fixed production costs Factory building and equipment lease Factory insurance Production supervisor's salary Total production costs 70,000 50,000 100,000 5820,000 I If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insurance costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Ocean Products, Inc Required: a. Perform differential analysis using the format presented in Figure 7.2. Assume making the surfboards internally is Alternative 1, and buying the surfboards from an outside manufacturer is Alternative 2. b. Which alternative is best? Explain. c Summarize the result of outsourcing production using the format presedin Figure 73. d. Compare the format used in requirement a with that of requirement. AutoSave On 2 Ch 7 WP - Compatibility Mode Home Insert Draw Page Layout Formulas Data Review View Help Search X Arial General aste BI - 11 - A E ab Wrap Text O. A Es Merge & Center $ -% 948-13 Conditor Formatur ipboard Font Alignment Number 6 f D E F G H K L M O a. (Make internally) Alternative 1 (Buy from outside) Alternative 2 Differential Amount Alternative 1 is: Variable production costs: Cost to buy from outside $ 0 $800,000* ($800,000) Fixed production costs: $900,000 Total production costs $800,000 = $80 per unit 10,000 units b. Provide your answer in the text box below: E39 E 40 a. & b. E 40 C. & d. E 41 c. & d. E 41 a. & b. - = - Merge & Center pboard Font 5 Alignment 6 X fx O E F G K b. Provide your answer in the text box below: c. Result of Outsourcing Production 3 1 d. Provide your answer in the text box below: -3 14 E39 E 40 a. & b. E 40 C. E 41 a. &b E 4 Ready ass S x Week 5 Part 11 x Yuzu: Managerix Make-or-Buy DX trig.pdf x + 875723/cf/3471/4/[email protected]:7.10 a Amazon.com: Onlin... YouTube Wanikani/Dashbo... N Netflix SSO-PROD-Group 1... Exercises: Set B 39. Make-or-Buy Decision. Ocean Products, Inc, currently manufactures its own surfboards for customers. Management is interested in outsourcing production of these surfboards to a reputable manufacturing company that can supply the surfboards for $80 per unit Ocean Products, Inc, incurs the following annual production costs to produce 10,000 surfboards internally. Total Annual Cost at 10,000 Units Per Unit $20 10 30 $200,000 100,000 300,000 Variable production costs Direct materials Direct labor Manufacturing overhead Fixed production costs Factory building and equipment lease Factory insurance Production supervisor's salary Total production costs 70,000 50,000 100,000 5820,000 I If production is outsourced, all variable production costs, factory building and equipment lease costs, and factory insurance costs will be eliminated. The production supervisor's salary cost will remain regardless of the decision to outsource or to produce internally because the supervisor recently signed a long-term contract with Ocean Products, Inc Required: a. Perform differential analysis using the format presented in Figure 7.2. Assume making the surfboards internally is Alternative 1, and buying the surfboards from an outside manufacturer is Alternative 2. b. Which alternative is best? Explain. c Summarize the result of outsourcing production using the format presedin Figure 73. d. Compare the format used in requirement a with that of requirement. AutoSave On 2 Ch 7 WP - Compatibility Mode Home Insert Draw Page Layout Formulas Data Review View Help Search X Arial General aste BI - 11 - A E ab Wrap Text O. A Es Merge & Center $ -% 948-13 Conditor Formatur ipboard Font Alignment Number 6 f D E F G H K L M O a. (Make internally) Alternative 1 (Buy from outside) Alternative 2 Differential Amount Alternative 1 is: Variable production costs: Cost to buy from outside $ 0 $800,000* ($800,000) Fixed production costs: $900,000 Total production costs $800,000 = $80 per unit 10,000 units b. Provide your answer in the text box below: E39 E 40 a. & b. E 40 C. & d. E 41 c. & d. E 41 a. & b. - = - Merge & Center pboard Font 5 Alignment 6 X fx O E F G K b. Provide your answer in the text box below: c. Result of Outsourcing Production 3 1 d. Provide your answer in the text box below: -3 14 E39 E 40 a. & b. E 40 C. E 41 a. &b E 4 Ready

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