That Company H should make rather than buy. Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

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Answer 1

Question

Chapter A, Problem 7P

a.

Summary Introduction

To identify: That Company H should make rather than buy.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

b.

Summary Introduction

To calculate: The break even quantity.

Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.

c.

Summary Introduction

To identify: The other consideration that might be important.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

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Hahn Manufacturing purchases a key component of one ofits products from a local supplier. The current purchase priceis $1,500 per unit. Efforts to standardize parts succeededto the point that this same component can now be used infive different products. Annual component usage should in-crease from 150 to 750 units. Management wonders whetherit is time to make the component in-house rather than tocontinue buying it from the supplier. Fixed costs would in-crease by about $40,000 per year for the new equipment andtooling needed. The cost of raw materials and variable over-head would be about $1,100 per unit, and labor costs wouldbe $300 per unit produced.a. Should Hahn make rather than buy?b. What is the break-even quantity?c. What other considerations might be important?

Hahn Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1,500 per unit. Efforts to standardize parts succeeded to the point that this same component can now be used in five different products. Annual component usage should increase from 150 to 750 units. Management wonders whether it is time to make the component in-house rather than to continue buying it from the supplier. Fixed costs would increase by about $40,000 per year for the new equipment and tooling needed. The cost of raw materials and variable overhead would be about $1,100 per unit, and labor costs would be $300 per unit produced. so What is the break-even quantity?

Corey spent the month of December talking to various suppliers in order to figure out how much all of the components of his business would cost. He added cost information to the information in the table below. Equipment, Materials and other Costs Cost Standard per Statue Resin Molds $2,500 n/a Processing Machine $5,000 n/a Packaging Machine $2,000 n/a Golden Wolves Logo T-shirts $75 for 100 1 Resin $100 for 25 pounds 1 lb for small statues and 2 lbs for large statues Small Packaging box $12.50 for 50 boxes 1 box Large Packaging box $20 for 50 boxes 1 box Business Licenses $200/year Rent $600/month IPad Point of Sale System $1,000 Point of Sale Software $30/month Utilities (gas, electric and water) $60/month Business Cell Phone $80/month Salary – Corey $500/month Carl’s Pay $10/hour 20 minutes per statue Julie’s Pay $10/hour 5 minutes…

Answer 2

Question

Chapter A, Problem 7P

a.

Summary Introduction

To identify: That Company H should make rather than buy.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

b.

Summary Introduction

To calculate: The break even quantity.

Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.

c.

Summary Introduction

To identify: The other consideration that might be important.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

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Answer 3

Question

Chapter A, Problem 7P

a.

Summary Introduction

To identify: That Company H should make rather than buy.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

b.

Summary Introduction

To calculate: The break even quantity.

Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.

c.

Summary Introduction

To identify: The other consideration that might be important.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

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Answer 4

Question

Chapter A, Problem 7P

a.

Summary Introduction

To identify: That Company H should make rather than buy.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

b.

Summary Introduction

To calculate: The break even quantity.

Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.

c.

Summary Introduction

To identify: The other consideration that might be important.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

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Answer 5

Chapter A, Problem 7P

a.

Summary Introduction

To identify: That Company H should make rather than buy.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

b.

Summary Introduction

To calculate: The break even quantity.

Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.

c.

Summary Introduction

To identify: The other consideration that might be important.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

Answer 6

Chapter A, Problem 7P

a.

Summary Introduction

To identify: That Company H should make rather than buy.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

Answer 7

Chapter A, Problem 7P

a.

Summary Introduction

To identify: That Company H should make rather than buy.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

Answer 8

b.

Summary Introduction

To calculate: The break even quantity.

Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.

Answer 9

b.

Summary Introduction

To calculate: The break even quantity.

Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.

Answer 10

c.

Summary Introduction

To identify: The other consideration that might be important.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

Answer 11

c.

Summary Introduction

To identify: The other consideration that might be important.

Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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That Company H should make rather than buy. Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

Solution Summary: The author explains that Company H should consider making rather than buying. The break-even quantity is the point where a company is earning no profits and incurring no losses.

To calculate: The break even quantity.

Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.

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Chapter A Solutions

That Company H should make rather than buy. Concept Introduction: Decision making is a process in which members of an organization select a particular course of action in response to both problem and opportunity. The objective of decision making is to gain a maximum and profitable result.

Solution Summary: The author explains that Company H should consider making rather than buying. The break-even quantity is the point where a company is earning no profits and incurring no losses.

To calculate: The break even quantity. Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.

Want to see the full answer?

Chapter A Solutions

To calculate: The break even quantity.

Concept Introduction: Break-even point is explained as a point where a company is earning no profits and incurring no losses reflecting that total cost is equivalent to total income.