Question

IrW (Decision makings ID Matsui Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 5,000 units, are as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost s 3 The fised overhead costs are unavoidable regardless of insource or outsource 1-I Kuwai Company has offered to sell 5,000 units of the same part to Matsui Company for $13 per If the company outsource, its facilities can be used to produce 3,000 units of a product that can generate a net profit for $2 per unit. Should Matsui Company do? Ronmet Buddere tuilds 1-500 sqnare-foot tarser tract homes in the fase Bennett Builders woold lik" to car" a profirer .5% ofthe variable cost of each hose sale. Similar homes offered by competing builders sell for 2. $200,000 each 2-1 Will Bennett Builder be able to obtain target profit level? 2-2 Bathrooms and kitchens are typically the most important selling feature of a home. Builders could differentiate the homes by upgrading bathrooms and kitchens. The upgrades would cost $20,000 per hom but would enable Bennett typically add about 150% of their costs to the value of any home.) will the new cost-plus price per home be? Should the company differentiate its produce in this manner? Builders to increase the selling prices by $35,000 per house (these updates . I f Bennett Builders upgrades, what Show the calculation to support your answer

Answer 1

Answer 1.

Differential analysis :

	Make	Buy
Direct material [5000*3]	15000
Direct labour [5000*5]	25000
Variable manufacturing overhead [5000*4]	20000
Opportunity cost (3000*2)	6000
Purchase cost (5000*13)		65000
Total relevant cost	66000	65000
Financial advantage		$1000

Company should buy the part and used spare capacity to manufacture another product as it will have financial advantage of $1000.

Ques 2 balance sheet and information is hazy and not visible, to be solved.