Sweet Wave has discovered that its cherry pie filling it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.82 per unit. Sweet Wave has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Sweet Wave needs 460,000 of these units each year. If Sweet Wave decides to buy the filling, rather than producing it, they can shift the machinery and labor to making a special gluten free pie crust it now buys from another company. Sweet Wave uses approximately 500 of these units each year. The cost of the unit is $12.66. To aid in the production of this unit, Sweet Wave would need to purchase a new machine at a cost of $2,345, and the cost of producing the units would be $9.90 a unit. Instructions Given the information above: (a) Without considering the possibility of making the gluten free pie crust, evaluate whether Sweet Wave should buy or continue to make the cherry pie filling. Do not use commas in your responses. For negative answers, please use "-" before the number Make Buy Change $Answer $Answer $Answer Answer $Answer $Answer Variable and fixed costs Fixed costs not eliminated Total Annual costs Variable Costs Fixed Costs Purchase Price Total cost Variable costs Fixed costs Purchase price Total annual cost Make Opportunity cost $Answer $Answer Total cost Should Sweet Wave buy or continue to make the cherry pie filling? Answer MakeBuy b1. What is Sweet Wave's opportunity cost if it chooses to buy the cherry pie filling and start manufacturing the gluten free pie crust? Do not use commas in your responses. For negative answers, please use "-" before the number Cost of Buying $Answer Units used x Cost of Unit $Answer Units used x Cost of producing each unit Cost of Making Opportunity Cost $Answer b2. If the company adds that amount to the cost of making the filling, it still does not bring the cost up to the total cost of buying the unit. Therefore, the company would still be better off make the filling and buy the GF pie crust. $Answer $Answer Make Part $Answer $Answer Buy $Answer $Answer $Answer $Answer $Answer Change Buy Part $ 0 Net Income Increase (Decrease) $Answer $Answer $Answer $Answer $Answer $Answer 0 $Answer $Answer

Sweet Wave has discovered that its cherry pie filling it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.82 per unit. Sweet Wave has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Sweet Wave needs 460,000 of these units each year. If Sweet Wave decides to buy the filling, rather than producing it, they can shift the machinery and labor to making a special gluten free pie crust it now buys from another company. Sweet Wave uses approximately 500 of these units each year. The cost of the unit is $12.66. To aid in the production of this unit, Sweet Wave would need to purchase a new machine at a cost of $2,345, and the cost of producing the units would be $9.90 a unit. Instructions Given the information above: (a) Without considering the possibility of making the gluten free pie crust, evaluate whether Sweet Wave should buy or continue to make the cherry pie filling. Do not use commas in your responses. For negative answers, please use "-" before the number Make Buy Change $Answer $Answer $Answer Answer $Answer $Answer Variable and fixed costs Fixed costs not eliminated Total Annual costs Variable Costs Fixed Costs Purchase Price Total cost Variable costs Fixed costs Purchase price Total annual cost Make Opportunity cost $Answer $Answer Total cost Should Sweet Wave buy or continue to make the cherry pie filling? Answer MakeBuy b1. What is Sweet Wave's opportunity cost if it chooses to buy the cherry pie filling and start manufacturing the gluten free pie crust? Do not use commas in your responses. For negative answers, please use "-" before the number Cost of Buying $Answer Units used x Cost of Unit $Answer Units used x Cost of producing each unit Cost of Making Opportunity Cost $Answer b2. If the company adds that amount to the cost of making the filling, it still does not bring the cost up to the total cost of buying the unit. Therefore, the company would still be better off make the filling and buy the GF pie crust. $Answer $Answer Make Part $Answer $Answer Buy $Answer $Answer $Answer $Answer $Answer Change Buy Part $ 0 Net Income Increase (Decrease) $Answer $Answer $Answer $Answer $Answer $Answer 0 $Answer $Answer

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6PB: Karens Quilts is considering the purchase of a new Long-arm Quilt Machine that will cost $17,500 and...

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