Current Attempt in Progress Bridgeport Racers makes bicycles. It has always purchased its bicycle tires from the Cullumber Tires at $26 each but is currently considering making the tires in its own factory. The estimated costs per unit of making the tires are as follows: Direct materials $9 Direct labor $5 Variable manufacturing overhead $8 The company's fixed expenses would increase by $73,000 per year if managers decided to make the tire. (a1) Calculate total relevant cost to make or buy if the company needs 11,300 tires a year. Make Buy $4 $ Total relevant cost (a2) Ignoring qualitative factors, if the company needs 11,300 tires a year, should it continue to purchase them from Balyo or begin to produce them internally? to purchase the tires. The company
Current Attempt in Progress Bridgeport Racers makes bicycles. It has always purchased its bicycle tires from the Cullumber Tires at $26 each but is currently considering making the tires in its own factory. The estimated costs per unit of making the tires are as follows: Direct materials $9 Direct labor $5 Variable manufacturing overhead $8 The company's fixed expenses would increase by $73,000 per year if managers decided to make the tire. (a1) Calculate total relevant cost to make or buy if the company needs 11,300 tires a year. Make Buy $4 $ Total relevant cost (a2) Ignoring qualitative factors, if the company needs 11,300 tires a year, should it continue to purchase them from Balyo or begin to produce them internally? to purchase the tires. The company
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Current Attempt in Progress
Bridgeport Racers makes bicycles. It has always purchased its bicycle tires from the Cullumber Tires at $26 each but is currently
considering making the tires in its own factory. The estimated costs per unit of making the tires are as follows:
Direct materials
$9
Direct labor
$5
Variable manufacturing overhead
$8
The company's fixed expenses would increase by $73,000 per year if managers decided to make the tire.
(a1) Calculate total relevant cost to make or buy if the company needs 11,300 tires a year.
Make
Buy
$4
2$
Total relevant cost
(a2) Ignoring qualitative factors, if the company needs 11,300 tires a year, should it continue to purchase them from Balyo or begin
to produce them internally?
v to purchase the tires.
The company
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