Hak 9 Seed 3 Slven Industres, which manufectures and sels a highly successful line of summer lotions and insect repelents, has decided to veruty in order to stabge sales t and creams to prevent dry and chapped s he year A nahural anea for the company to cosider is the production of winter lotions 166 After conuderable research, a winter products bne has been developed However, Silven's president has decided to introduce only one of the new products for thss coming witer i the product is a success, further expansion in future years wil be intiated poras eadace The preduct selected jcaled Chap-Om) in a lip baim that will be sold in a lipssick type tube. The product will be sold to wholesalers inc bowes of 24 subes for $8 per box Because of escess capacity, no adotional fed manufacturing overhead costs will be incured to taoned conpan duct Howeve $90,000 charge for fved manufacturing overhead will be absorbed by the product under the absorption costing system Using the estimated sales and production of 100.000 boses of Chap Oft the Accounting Department has developed the following manufacturing cost per box tndwturg eded Tet al eet 1 1700 The costs above relate to making both the lo balm and the tube that contains Slven has approached e supplier to dscuss the possbity of buying the tubes The ve to making the subes for Chap O d be $135 per box of 24 tubes Sven industries stops meking the subes and buys them from the outade supplier ts drect As a the suppher's empty tubes Jabor and vanable manuactuing ovehead costs ger box of Ohp Of would be eduredson and drect manerias costs would be reduced by 25% Required 1E seren buvs ts tubes from the outude supplier howmuchs Hnt You need to separate the manufacturing averhead of $140 per box that s shown above into ts variable and foed conponents to deve the conect anmer 2 What is the financial advantage edsadvantagel per box of Chap-Off Stven buys ts tubes from the outside supoler? of as own Chap Off manufacturing costs per bo will be able to avoid 4 Shouit ancial adventage iadvantagn total (not per boSven buys t00,000 boes of ubes trom the outside suppler? 5 What is the mavim uy te tubes 6 Instead of sales of 100000 boees of how e Fe odsde supplier for a box ofr 24 tubes vokume, Seven would need to rent estra equipment at a cost of Ss40000 voune of 120000 boes of hbes A his gher sales Assuning that the outside supplier wil not accept an order for less than t20000 o onal 20000 boxes of tubes S ein total (not per bo Sven bys t20,000 bowes of tubes trom the outside supple Gven this new indomanion should 2Reler so the date y ine ubes box How any boxes of tubes should Seeam e supplier wil accept an order of any sige for the tubes at a price of $135 per at is the Snancial advantage Bat tbe a How many boes of tubes should it buy from the outside supplier Complete this qestion by entering your answers in the tas below. Reg 30 eg 2 Rej Reg 7 it silven boys te bubes from he ested avd ( Yu d to separate the man e ach o s ownChap 0f mantaituring coate pr bo wiiR be fed compenents to derlve the corract anwe) (etround intemediate caklatio Round ye anwer to 2 dec thet is shiw bove ino ts vartabie and to places y show less a w Direct astetial Direct labor Manud actiae ovethend $3.60 2.00 1. 40 rint Tot al coet $7.00 rences 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-Off, Silven has approached a supplier to discuss the possibility of buying the tubes. The purchase price of the supplier's empty tubes would be $135 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% 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 $1,40 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-Off f Silven buys its tubes from the outside supplier? 3. What is the financial advantage (disadvantage) in total (not per box) Silven buys 100,000 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 100,000 boxes of tubes, revised estimates show a sales volume of 120.000 boxes of tubes. At this higher sales volume, Silven would need to rent extra equipment at a cost of $40.000 per year to make the additional 20.,000 boxes of tubes. Assuming that the outside supplier will not accept an order for less than 120000 boxes of tubes, what is the financial advantage (disadvantage) in total (not per box) if Silven buys 120,000 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 (6) above. Assume that the outside supplier will accept an order of any size for the tubes at a price of $1.35 per box. How many boxes of tubes should Sliven make? How many boxes of tubes should it buy from the outside supplier? Complete this question by entering your answers in the tabs below. Rer 6 Req 1 Req 2 Reg 3 Reg 4 Reg 5 Reg 7 Instead of sales of 100,000 boxes of tubes, revised estimates show a sales volume of 120,000 boxes of tubes, At this higber sales volume, Silven would need to rent extra equipment at a cost of $40,000 per year to make the additional 20,000 boxes of tubes. Assuming that the outside supplier will not accept an order for less than 120,000 boxes of tubes, what is the financial advantage (disadvantage) in total (not per box) if Silven buys 120,000 boxes of tubes from the outside supplier? Given this new information, should Silven Industries make or buy the tubes? Show less & Make or buy the boxes of tubes? $3.60 Direct naterial Direct labor Manud acturing ovethead. Print 2,00 1,40 Tot al cost $7.00 References. 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-Off Silven has approached a supplier to discuss the possibility of buying the tubes. The purchase price of the supplier's empty tubes would be $1.35 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% 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 $1.40 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-Off if Silven buys its tubes from the outside supplier? 3. What is the financial advantage (disadvantage) in total (not per box) if Silven buys 100,000 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 100,000 boxes of tubes, revised estimates show a sales volume of 120,000 boxes of tubes. At this higher sales volume, Silven would need to rent extra equipment at a cost of $40,000 per year to make the additional 20,000 boxes of tubes. Assuming that the outside supplier will not accept an order for less than 120.000 boxes of tubes, what is the financial advantage (disadvantage) in total (not per box) if Silven buys 120,000 baxes of tubes from the outside supplier? Given this new information, should Silven Industries make or buy the tubes? 7. Refer to the data in (6) above. Assume that the outside supplier will accept an order of any size for the tubes at a price of $1.35 per box. How many baxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Refer to the data in (6) above. Assume that the outside supplier will accept an order of any size for the tubes at a price of $1.35 per box, How many boxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier? Number of boxes of tubes manufactured by Silven Number of boxes of tubes purchased from the outside supplier Req 6 Reg 7> Mc