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Riverside Clippers Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data concerning the decision are: 800,000 Expected annual sales of tools (in units) Average selling price of tools Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD) Current exchange rate Variable manufacturing costs Incremental annual fixed manufacturing costs associated with the new product line Variable selling and distribution costsa Annual fixed selling and distribution costs $12 175 35NTD = 1$ $4.75 per unit $400,000 $1 per unit $220,000 a Selling and distribution costs are the same regardless of whether the tools are manufactured in Mary- land or imported.

Riverside Clippers Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data concerning the decision are: 800,000 Expected annual sales of tools (in units) Average selling price of tools Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD) Current exchange rate Variable manufacturing costs Incremental annual fixed manufacturing costs associated with the new product line Variable selling and distribution costsa Annual fixed selling and distribution costs $12 175 35NTD = 1$ $4.75 per unit $400,000 $1 per unit $220,000 a Selling and distribution costs are the same regardless of whether the tools are manufactured in Mary- land or imported.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 26E: Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other...
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What are some of the qualitative factors that Riverside Clippers Corp should consider when deciding whether to outsource the garden tools manufacturing to Taiwan?

Riverside Clippers Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data concerning the decision are: 800,000 Expected annual sales of tools (in units) Average selling price of tools Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD) Current exchange rate Variable manufacturing costs Incremental annual fixed manufacturing costs associated with the new product line Variable selling and distribution costsa Annual fixed selling and distribution costs $12 175 35NTD = 1$ $4.75 per unit $400,000 $1 per unit $220,000 a Selling and distribution costs are the same regardless of whether the tools are manufactured in Mary- land or imported.
Transcribed Image Text:Riverside Clippers Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data concerning the decision are: 800,000 Expected annual sales of tools (in units) Average selling price of tools Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD) Current exchange rate Variable manufacturing costs Incremental annual fixed manufacturing costs associated with the new product line Variable selling and distribution costsa Annual fixed selling and distribution costs $12 175 35NTD = 1$ $4.75 per unit $400,000 $1 per unit $220,000 a Selling and distribution costs are the same regardless of whether the tools are manufactured in Mary- land or imported.
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