This paper circulates around the core theme of By how much will Oxford Engineering’s total profits change if they decide to buy the starter assembly from Tidnish Electronics instead of making it themselves? together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Oxford Engineering manufactures small engines. The engines are sold to
manufacturers who install them in such products as lawn mowers. The
company currently manufactures all the parts used in these engines but
is considering a proposal from an external supplier to supply the
starter assembly used in these engines. The starter assembly is
currently manufactured in Division 3 of Oxford Engineering. Last year,
Division 3 manufactured 132,000 starter assemblies, but over the next
several years, it is expected that 170,000 assemblies will be needed
each year. Per-unit costs related to the starter assembly for last year
were as follows: Direct material $1.98 Direct labor $1.08 Total overhead
$5.00 Total $8.06 Further analysis of overhead revealed the following
information: 35% of total overhead was variable. $120,000 of the fixed
overhead were allocated costs that will continue even if the production
of the starter assembly is discontinued. Tidnish Electronics, a reliable
supplier, has offered to supply starter assembly units at $5.50 per
unit. If the company buys the assembly from Tidnish, sales of another
product can be increased, resulting in additional contribution margin of
$42,000. REQUIRED 1. By how much will Oxford Engineering’s total
profits change if they decide to buy the starter assembly from Tidnish
Electronics instead of making it themselves? (Note: if the buy costs are
less than the make costs, enter the difference as a positive number; if
the make costs are less than the buy costs, enter the difference as a
negative number.) WRONG ANSWERS: 203770, 57200,-57200,259920,-259920 I
have only 1 try left, please make sure the answer is right.
