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Free Chegg Answer From Techcrachi #Ch-129522

The document is an email from an online homework help service providing answers to a Chegg question about determining whether a company should make or buy starter assemblies. The email contains: 1) The full Chegg question and the service's answer providing calculations to determine the production volume at which the company would be indifferent. 2) Additional explanations and calculations incorporating storage costs, determining a higher production volume of 190,000 units for when it is preferable to manufacture internally. 3) A request for the customer to confirm they received the answers and a reminder to like the service's social media pages in appreciation.

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122 views2 pages

Free Chegg Answer From Techcrachi #Ch-129522

The document is an email from an online homework help service providing answers to a Chegg question about determining whether a company should make or buy starter assemblies. The email contains: 1) The full Chegg question and the service's answer providing calculations to determine the production volume at which the company would be indifferent. 2) Additional explanations and calculations incorporating storage costs, determining a higher production volume of 190,000 units for when it is preferable to manufacture internally. 3) A request for the customer to confirm they received the answers and a reminder to like the service's social media pages in appreciation.

Uploaded by

Kristine Yana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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4/24/2021 Gmail - Free Chegg Answer from TechCrachi #CH-129522

Mailfor Deel <[email protected]>

Free Chegg Answer from TechCrachi #CH-129522


2 mga mensahe

Homework Help <[email protected]> Abril 24, 2021 nang 9:43 PM


Sagot-Sa/Kay: [email protected]
Kay: [email protected]

Welcome to the family of TechCrachi, Recently you've asked for Unblur this Chegg Question on our website:
https://www.chegg.com/homework-help/questions-and-answers/oxford-engineering-manufactures-small-engines-engines-
sold-manufacturers-install-products--q2905462

Please find your Answer below (or) in the attached Image / Document!

Answer
The variable costs required to manufacture 150,000 starter assemblies are:
„ Direct Materials $200,000
„ Direct Manufacturing Labor $150,000
„ Variable Manufacturing Overhead (25%*$400,000)= $100,000
„ Total Variable Costs $450,000
So Var Cost pu = $450,000/150000 = $3 pu ............(A)

Let X be the number of starter assemblies required in the next 12 months.

As Fixed OH which are art of General OH will be allocated whether you make or Buy, they are not relevant for decision
making & hence the revised Table is as below.

https://mail.google.com/mail/u/0?ik=7982b6eca0&view=pt&search=all&permthid=thread-f%3A1697929534325496858&simpl=msg-f%3A16979295343… 1/2
4/24/2021 Gmail - Free Chegg Answer from TechCrachi #CH-129522
So Solving for X, we get 190000+3X = 50000 +4X

ie X = 190000-50000 = 140,000 units

So at a Prod Vol of 140,000, Offord will be Indifferent to Make or Buy option.

Ans (1) :

On the basis of financial considerations alone,

a. If production is expected to be less than 140,000 units,it is preferable to buy units from Tidnish.

b. If production is expected to exceed 140,000 units, it is preferable to manufacture internally (make) the units.

c. If production is expected to be 140,000 units, Oxford should be indifferent between buying units from Tidnish and
manufacturing (making) the units internally.

Thus The justification provided by the V.P. of manufacturing is wrong because she implicitly considered all fixed
costs avoidable.

Ans (2)

The information on the storage cost, which is avoidable if self-manufacture is discontinued, is relevant; these storage
charges represent current outlays that are avoidable if self-manufacture is discontinued. Assume these $50,000 charges
are represented as an opportunity cost of the make alternative. The costs of internal manufacture that incorporate this
$50,000 opportunity cost are as below:

The indifference point is now $190,000 + $50,000+ 3x = $50,000 + 4x

ie X= 190,000

Soe If production is expected to be less than 190,000, it is preferable to buy units from Tidnish. If production is expected
to exceed 190,000, it is preferable to manufacture the units internally.

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answers you requested.
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Mailfor Deel <[email protected]> Abril 24, 2021 nang 9:45 PM


Kay: [email protected]

Thank you for this! I really appreciate it.

Noong Sab, Abr 24, 2021 nang 9:43 PM, sinulat ni Homework Help <[email protected]> ang:
[Nakatago ang tekstong may panipi]

https://mail.google.com/mail/u/0?ik=7982b6eca0&view=pt&search=all&permthid=thread-f%3A1697929534325496858&simpl=msg-f%3A16979295343… 2/2

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