Q1. Decorative Doors is a company that manufactures largequantities of wooden doors. Currently, they manufacture door knobsto be sold with their doors. A specialized door knob manufacturerhas offered to sell them door knobs for a cost of $10 per knob.Their current relevant manufacturing costs for a batch 1,200 doorknobs are as follows: Direct Materials: $5,000 , Direct Labour:$4,000 , Factory Overhead: $2,000 .
A)What is the per door knob cost of manufacturing? (round to thenearest cent, no dollar sign)
B)Should Decorative Doors make or buy door knobs?
a.make
b.buy
Q2. Casualwear Co. manufactures mens shirts. They currently producetheir own buttons to be used on their shirts. Buttons R Us offersto sell them buttons for $1.75 per button. Casualwear's totalmanufacturing costs for a batch of 1,500 buttons is as follows:Direct Materials: $900 , Direct Labour: $750 , Factory Overhead:$400. If Casualwear was to buy their buttons, they could either usetheir plant for other manufacturing, and increase their profit by$3,000, or they could rent it out for $2,500.
A)What is total cost of manufacturing a batch of buttons? (round tonearest dollar, no dollar sign)
B)Which option should Casualwear choose?
a.make buttons
b.buy buttons and leave facility idle
c.buy buttons and increase production
d.buy buttons and rent out facility space
Q3. Songo Inc. manufactures MP3 players. After a slow sales year,they are left with 500 outdated MP3 players. The originalproduction cost of the players was $5,000. Songo has the choice ofupdating these players for a cost of $2,000 and then selling themfor $7,500, or scrapping them for proceeds of $3,500.
A)What would be the net result of reworking the MP3 players? (roundto nearest dollar, no dollar sign)
B)What should Songo do with the outdated MP3 players?
a.rework
b.scrap
