solution

EZ Stor, Inc., produces hard disk drives of various sizes for use in computer and electronic equipment. Costs for one product, EZ-5, follow for the normal volume of 5,000 per month. $30 5 5 50 Unit manufacturing costs Variable materials. Variable labor Variable overhead Fixed overhead Total unit manufacturing costs Unit nonmanufacturing costs Variable Fixed Total unit nonmanufacturing costs. Total unit costs $ 90 $10 20 30 $120 A proposal is received from an outside supplier who will test, produce, and ship 1.000 units per month directly to EZ Stor’s customers as orders are received from Ez s sales force. EZ Stor’s fixed and variable non-manufacturing costs would be unaffected, but its variable manufacturing costs would be cut by 20 percent per unit for those 1.000 units shipped by the contractor. EZ Stor’s plant would operate at 80 percent of its normal level. and total fixed manufacturing costs per month would be cut by 10 percent. Should the proposal be accepted for a payment to the contractor of S38 per unit?1 (Revenue information is not needed to answer this question.) 2.5BZ Stor, Inc., produces hard disk drives of various sizes for use in computer and electronic- equipment. Costs for one product, EZ-5, follow for the normal volume of 5,000 per month. $30 5 5 50 Unit manufacturing costs Variable materials. Variable labor Variable overhead Fixed overhead Total unit manufacturing costs Unit nonmanufacturing costs Variable Fixed Total unit nonmanufacturing costs. Total unit costs 1. $ 90 $10 20 30 $120 A proposal is received from an outside supplier who will test, produce, and ship 1.000 units per month directly to EZ Stor’s customers as orders are received from EZ’s sales forec. EZ Stor’s fixed and variable non-manufacturing costs would be unaffected, but its variable manufacturing costs would be cut by 20 percent per unit for those 1.000 units shipped by the contractor. EZ Stor’s plant would operate at 80 percent of its normal level. and total fixed manufacturing costs per month would be cut by 10 percent. Should the proposal be accepted for a payment to the contractor of S38 per unit? (Revenue information is not needed to answer this question.) |