I need an answer for number 1, please, thank you! Shurp Company manufactures a variety of air-conditioning units. The company is currentlymanufacturing all of its component parts. An outside supplier has offered to sell a thermostat to Shurpfor P40 per unit. To evaluate this offer, Shurp has gathered the following information relating to its owncost of producing the thermostat internally:wwww15,000 units per yearP180,000240,00030,000150,000300,000P900,000DMP12DL16умон2FMOH, traceable*10FMOH, common20Total costРбо40% supervisory salaries; 60% depreciation of special equipment (no resale value)1. Assuming that the company has no alternative use for the facilities now being used to produce thethermostat, should the outside supplier's offer be accepted?2. Suppose that if the thermostat were purchased, Shurp could use the freed capacity to launch a newproduct. The segment margin of the new product would be P130,000 per year. Should Shurp accept theoffer to buy the thermostats from the outside supplier for P40 each?

Differential analysis is done for comparing the cost of making and buying.

Shurp Company manufactures a variety of air-conditioning units. The company is currently manufacturing all of its component parts. An outside supplier has offered to sell a thermostat to Shurp for P40 per unit. To evaluate this offer, Şhurp has gathered the following information relating to its own cost of producing the thermostat internally: 15,000 units per year DM P12 P180,000 DL 16 240,000 VMOH 2 30,000 FMOH, traceable *10 150,000 300,000 P900,000 FMOH, common 20 Total cost P60 40% supervisory salaries; 60% depreciation of special equipment (no resale value) 1. Assuming that the company has no alternative use for the facilities now being used to produce the thermostat, should the outside supplier's offer be accepted? 2. Suppose that if the thermostat were purchased, Shurp could use the freed capacity to launch a new product. The segment margin of the new product would be P130,000 per year. Should Shurp accept the offer to buy the thermostats from the outside supplier for P40 each?

Shurp Company manufactures a variety of air-conditioning units. The company is currently manufacturing all of its component parts. An outside supplier has offered to sell a thermostat to Shurp for P40 per unit. To evaluate this offer, Şhurp has gathered the following information relating to its own cost of producing the thermostat internally: 15,000 units per year DM P12 P180,000 DL 16 240,000 VMOH 2 30,000 FMOH, traceable *10 150,000 300,000 P900,000 FMOH, common 20 Total cost P60 40% supervisory salaries; 60% depreciation of special equipment (no resale value) 1. Assuming that the company has no alternative use for the facilities now being used to produce the thermostat, should the outside supplier's offer be accepted? 2. Suppose that if the thermostat were purchased, Shurp could use the freed capacity to launch a new product. The segment margin of the new product would be P130,000 per year. Should Shurp accept the offer to buy the thermostats from the outside supplier for P40 each?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 16E

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