Should the company continue to manufacture the part, or should it buy the part from the outside supplier?

.A company inadvertently produced 3,000 defective products.
The product cost $15 each to be manufactured and normally sells for $35 each. A
salvage company will purchase the defective units as they are for $12 each. The
production manager reports that the defects can be corrected for $5 per unit,
enabling the company to sell them at a discounted price of $22.00. The repair
operations would not affect other production operations. Prepare an analysis
that shows which action should be taken.

139.Sherman Company can sell all of product A that it produces
but only 160,000 units of Z and it has limited production capacity. It can
produce 6 units of A per hour or 10 units of Z per hour, and it has 30,000
production hours available. Contribution margin per unit is $12 for A and $10
for Z. What is the most profitable sales mix for this company?

140.Fields Company currently manufactures one of its parts at
a cost of $3.25 per unit. This cost is based on a normal production rate of
50,000 units. Variable costs are $2.10 per unit, fixed costs related to making
this part are $40,000 per year, and allocated fixed costs are $45,000 per year.
Allocated fixed costs are unavoidable whether the company makes or buys the
part. Fields is considering buying the part from
a supplier
for a quoted price of $2.80 per unit guaranteed for a three-year period. Should
the company continue to manufacture the part, or should it buy the part from
the outside supplier? Support your answer with analyses.

141._____________________ is the
process of analyzing alternative long-term investments and deciding which
assets to acquire or sell.
________________________________________

142.The minimum acceptable
rate of return on an investment is called the ________________.
________________________________________

143.Relevant costs are
also known as __________________.
________________________________________

144.An ________________________ requires a future outlay of
cash and is relevant for current and future decision making.
________________________________________

145.An ______________________________ is the potential benefit
lost by taking a specific action when two or more alternative choices are
available.
________________________________________

146.A _____________________ arises from a past decision and
cannot be avoided or changed; it is irrelevant to future decisions.
________________________________________

147.In this chapter, you examined several short-term
managerial decision tasks. Identify (list) any three of these types of decision
tasks:
___________________________
_________________________
_________________________
________________________________________138.A company inadvertently produced 3,000 defective products.
The product cost $15 each to be manufactured and normally sells for $35 each. A
salvage company will purchase the defective units as they are for $12 each. The
production manager reports that the defects can be corrected for $5 per unit,
enabling the company to sell them at a discounted price of $22.00. The repair
operations would not affect other production operations. Prepare an analysis
that shows which action should be taken.139.Sherman Company can sell all of product A that it produces
but only 160,000 units of Z and it has limited production capacity. It can
produce 6 units of A per hour or 10 units of Z per hour, and it has 30,000
production hours available. Contribution margin per unit is $12 for A and $10
for Z. What is the most profitable sales mix for this company?140.Fields Company currently manufactures one of its parts at
a cost of $3.25 per unit. This cost is based on a normal production rate of
50,000 units. Variable costs are $2.10 per unit, fixed costs related to making
this part are $40,000 per year, and allocated fixed costs are $45,000 per year.
Allocated fixed costs are unavoidable whether the company makes or buys the
part. Fields is considering buying the part froma supplier
for a quoted price of $2.80 per unit guaranteed for a three-year period. Should
the company continue to manufacture the part, or should it buy the part from
the outside supplier? Support your answer with analyses.141._____________________ is the
process of analyzing alternative long-term investments and deciding which
assets to acquire or sell.________________________________________142.The minimum acceptable
rate of return on an investment is called the ________________.________________________________________143.Relevant costs are
also known as __________________.________________________________________144.An ________________________ requires a future outlay of
cash and is relevant for current and future decision making.________________________________________145.An ______________________________ is the potential benefit
lost by taking a specific action when two or more alternative choices are
available.________________________________________146.A _____________________ arises from a past decision and
cannot be avoided or changed; it is irrelevant to future decisions.________________________________________147.In this chapter, you examined several short-term
managerial decision tasks. Identify (list) any three of these types of decision
tasks:_____________________________________________________________________________________________________________________

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