Question

Pillow Plush​, ​Inc., manufactures plush toys in a facility in​ Cleveland, Ohio.​ Recently, the company designed a group of collectible resin figurines to go with the plush toy line. Management is trying to decide whether to manufacture the figurines themselves in existing space in the Cleveland facility or to accept an offer from a manufacturing company in Indonesia. Data concerning the decision​ are:

Requirement 1. Should Pillow Plush manufacture the 410,000 figurines in the Cleveland facility or purchase them from the Indonesian​ supplier? Explain. The cost of manufacturing 410,000 figurines in the Cleveland facility is _​$ and the cost of purchasing 410,000 figurines from Indonesian supplier is​ $_

Expected annual sales of figurines​ (in units)	410,000
Average selling price of a figurine	$ 4
Price quoted by Indonesian​ company, in Indonesian Rupiah​ (IDR), for each figurine	27,300 IDR
Current exchange rate	9,100 IDR​ = $1
Variable manufacturing costs	$2.90 per unit
Incremental annual fixed manufacturing costs associated with the new product line	$160,000
Variable selling and distribution costsSuperscript aa	$0.45 per unit
Annual fixed selling and distribution costs $300,000
Selling and distribution costs are the same regardless of whether the figurines are manufactured in Cleveland or imported.

Answer 1