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ridgeport 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 Total relevant cost $enter a dollar amount  $enter a dollar amount  (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? The company select an option                                                           should not continueshould continue to purchase the tires.

ridgeport 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 Total relevant cost $enter a dollar amount  $enter a dollar amount  (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? The company select an option                                                           should not continueshould continue to purchase the tires.

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
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 8CE: Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each...
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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
Total relevant cost
 $enter a dollar amount  $enter a dollar amount 


(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?

The company select an option                                                           should not continueshould continue to purchase the tires.
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 $ 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? The company to purchase the tires. %24
Transcribed Image Text: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 $ 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? The company to purchase the tires. %24
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