Queen Inc. has the option to make or buy one of its component parts. The annual...

Queen Inc. has the option to make or buy one of its component parts. The annual requirement is 20,000 units. A supplier is able to supply the parts for $11 per piece. The firm estimates that it costs $ 600 to prepare the contract with the supplier. To make the part in-house, the firm must invest $50,000 in capital equipment and estimates that the parts cost $ 9 per piece. Complete the table below. Important! Enter all responses as whole numbers with a comma as needed (#,###).

Should the firm make or buy? (Enter Make or Buy)
What is the break-even quantity? (Enter as ##,### or #,###)
What is the total cost at the break-even point? (Enter as ###,### or ##,###)	$

Assume instead that the annual requirement is 27,000; calculate the total cost for both options and the cost savings for choosing the cheaper option.
Total cost for making at 27,000 units: (Enter as ###,### or ##,###)	$
Total cost for buying at 27,000 units: (Enter as ###,### or ##,###)	$
Cost savings from choosing the cheaper option: (Enter as ##,### or #,###)	$

Expert Solution

ekkarill92 answered 1 year ago

sardi Inc. is considering whether to continue to make a component or to buy it from...

sardi Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 12,400 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows: Direct materials $ 8.20 Direct labor 5.20 Variable manufacturing overhead 1.00 Fixed manufacturing overhead 3.00 Unit product cost $ 17.40 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 35%...

Examine the concept of revenue management, its component parts and the characteristics of businesses that make...

Examine the concept of revenue management, its component parts and the characteristics of businesses that make them suitable to the application of revenue management techniques. Quote examples from the hospitality, wellness, and / or other tourism business. Reference a minimum of four readings. Word count 1,000 words approximately focus on hotel industry

MAKE OR BUY DECISION Component T6 is used in one of the company's products. The unit...

MAKE OR BUY DECISION Component T6 is used in one of the company's products. The unit product cost of the component according to the company's cost accounting system is determined as follows: Direct Materials . . . . . . . . . . . . . . . . . . . . . . . $45.00 Direct Labor . . . . . . . . . . . . . . . . . . . ....

29. Auto parts limited has an annual production of 90,000 units for a motor component. The...

29. Auto parts limited has an annual production of 90,000 units for a motor component. The component’s cost structure per unit is given below: Materials Rs. 2.70; labour (25% fixed) Rs. 180; Variable Expenses Rs. 90; Fixed Expenses Rs. 135; Total Rs. 675; The purchase manager has an offer from a supplier who is willing to supply the component at Rs. 540. Should the component be purchased? Assuming that the resources now used for the purpose of this components manufacture...

Queen, Inc., has a total debt ratio of .30.

Queen, Inc., has a total debt ratio of .30.a. What is its debt-equity ratio?b. What is its equity multiplier?

Make or Buy Terry Inc. manufactures machine parts for aircraft engines. CEO Bucky Walters is considering...

Make or Buy Terry Inc. manufactures machine parts for aircraft engines. CEO Bucky Walters is considering an offer from a subcontractor to provide 3,000 units of product OP89 for $165,000. If Terry does not purchase these parts from the subcontractor, it must continue to produce them in-house with these costs: Costs per Unit Direct materials $26 Direct labor $17 $Variable overhead $15 Allocated fixed overhead $4 Required: Calculate the relevant cost for producing the product. Relevant Cost Per Unit Total...

Heritage Inc. has the option to buy a widget machine. The initial investment required today is...

Heritage Inc. has the option to buy a widget machine. The initial investment required today is $240,000. The machine is expected to generate revenues of $65,000 each year for the next 5 years, at which time it can be sold for $20,000 after-tax. If the firm’s hurdle rate is 15%, what is the NPV? What is the PI? What is the IRR? What is the MIRR? What is the payback period? Please show all work and formulas. Espically for the...

You buy one Home Depot (HD) call option and one HD put option, both with a...

You buy one Home Depot (HD) call option and one HD put option, both with a $215 strike price and a June expiration date. The call premium is $9.25 and the put premium is $23.70. Your maximum loss from this position could be ________. At expiration, you break even if the stock price is equal to _____. 2) JPM stock currently sells for $90. A 6-month call option with strike price of $100 sells for $6.00, and the risk free...

A toy manufacturer has two options to acquire electronic component for existing products Option one: pay...

A toy manufacturer has two options to acquire electronic component for existing products Option one: pay a sub-contractor $600,000 (before tax) a year. Option two: produce the component by itself. If the firm chooses to produce, the production cost would be $300,000 a year, and the machine will cost $150,000. Also a working capital of $25,000 is required. The working capital will be recovered when the production ends. Assume the production will last for four years. The machine can be...

You are given the following information: Costs Make Option Buy Option Fixed Cost SAR 62500 SAR...

You are given the following information: Costs Make Option Buy Option Fixed Cost SAR 62500 SAR 2500 Variable Cost SAR 7.5 SAR 8.5 Find the break-even quantity and the total cost at the break-even point. If the requirement is 75000 units, is it more cost-effective for the firm to buy or make the components? What is the cost savings for choosing the cheaper option?

Question