a. Assume Almoyed Corporation has no alternative use for the facilities that are now being used to produce of the B345 gaskets. If the outside supplier offers to sell the gaskets for $0.46 each, what would be the financial advantage (disadvantage) of buy 100,000 B345 gaskets from the outside supplier? b. should Almoyed Corporation accept the offer? Why? c. Assume that Almoyed Corporation could use the facilities that are now being used to produce the B345 gaskets to expand production of another product that would yield an additional contribution margin of S10,000 annually. Given this new assumption, what would the financial advantage (disadvantage) of buying 100,000 B345 gaskets from the outside supplier? d. Based on the new assumption in requirement (c), What is the maximum price Almoyed Corporation should be willing to pay the outside supplier for B345 gaskets? Fully support your answer with appropriate calculations.

a. Assume Almoyed Corporation has no alternative use for the facilities that are now being used to produce of the B345 gaskets. If the outside supplier offers to sell the gaskets for $0.46 each, what would be the financial advantage (disadvantage) of buy 100,000 B345 gaskets from the outside supplier? b. should Almoyed Corporation accept the offer? Why? c. Assume that Almoyed Corporation could use the facilities that are now being used to produce the B345 gaskets to expand production of another product that would yield an additional contribution margin of S10,000 annually. Given this new assumption, what would the financial advantage (disadvantage) of buying 100,000 B345 gaskets from the outside supplier? d. Based on the new assumption in requirement (c), What is the maximum price Almoyed Corporation should be willing to pay the outside supplier for B345 gaskets? Fully support your answer with appropriate calculations.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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