The Sunshine Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the following cost information about the costs of making CMCBS in 2017 and the expected costs in 2018 E (Click the icon to view the costs.) A (Click the icon to view the make-versus-buy information.) Requirements 1. Calculate the total expected manufacturing cost per unit of making CMCBS in 2018. 2. Suppose the capacity currently used to make CMCBS will become idle if Sunshine purchases CMCBS from Moonbeam. On the basis of financial considerations alone, should Sunshine make CMCBS or buy them from Moonbeam? Show your calculations. Requirement 1. Calculate the total expected manufacturing cost per unit of making CMCBS in 2018. Total Manufacturing Manufacturing Costs of CMCB Cost per Unit 3. Now suppose that if Sunshine purchases CMCBS from Moonbeam, its best alternative use of the capacity currently used for CMCBS is to make and sell special circuit boards (CB3S) to the Eleanor Corporation. Sunshine estimates the following Direct materials incremental revenues and costs from CB3S: Direct manufacturing labor Total expected incremental future revenues $1,900,000 Variable batch manufacturing costs Total expected incremental future costs $2,025,000 On the basis of financial considerations alone, should Sunshine make CMCBS or buy them from Moonbeam? Show your calculations. Fixed manufacturing costs Avoidable fixed manufacturing costs Unavoidable foxed manufacturing costs More info Total manufacturing costs Sunshine manufactured 9,000 CMCBS in 2017 in 50 batches of 180 each. In 2018, Sunshine anticipates needing 14,000 CMCBS. The CMCBS would be produced in 100 batches of 140 each. The Moonbeam Corporation has approached Sunshine about supplying CMCBS to Sunshine in 2018 at $350 per CMCB on whatever delivery schedule Sunshine wants.
The Sunshine Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the following cost information about the costs of making CMCBS in 2017 and the expected costs in 2018 E (Click the icon to view the costs.) A (Click the icon to view the make-versus-buy information.) Requirements 1. Calculate the total expected manufacturing cost per unit of making CMCBS in 2018. 2. Suppose the capacity currently used to make CMCBS will become idle if Sunshine purchases CMCBS from Moonbeam. On the basis of financial considerations alone, should Sunshine make CMCBS or buy them from Moonbeam? Show your calculations. Requirement 1. Calculate the total expected manufacturing cost per unit of making CMCBS in 2018. Total Manufacturing Manufacturing Costs of CMCB Cost per Unit 3. Now suppose that if Sunshine purchases CMCBS from Moonbeam, its best alternative use of the capacity currently used for CMCBS is to make and sell special circuit boards (CB3S) to the Eleanor Corporation. Sunshine estimates the following Direct materials incremental revenues and costs from CB3S: Direct manufacturing labor Total expected incremental future revenues $1,900,000 Variable batch manufacturing costs Total expected incremental future costs $2,025,000 On the basis of financial considerations alone, should Sunshine make CMCBS or buy them from Moonbeam? Show your calculations. Fixed manufacturing costs Avoidable fixed manufacturing costs Unavoidable foxed manufacturing costs More info Total manufacturing costs Sunshine manufactured 9,000 CMCBS in 2017 in 50 batches of 180 each. In 2018, Sunshine anticipates needing 14,000 CMCBS. The CMCBS would be produced in 100 batches of 140 each. The Moonbeam Corporation has approached Sunshine about supplying CMCBS to Sunshine in 2018 at $350 per CMCB on whatever delivery schedule Sunshine wants.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:The Sunshine Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an
important part of the cellular modem. It reports the following cost information about the costs of making CMCBS in 2017 and the
expected costs in 2018:
E (Click the icon to view the costs.)
(Click the icon to view the make-versus-buy information.)
- X
Requirements
1. Calculate the total expected manufacturing cost per unit of making CMCBS in 2018.
2. Suppose the capacity currently used to make CMCBS will become idle if Sunshine purchases CMCBS from Moonbeam. On
the basis of financial considerations alone, should Sunshine make CMCBS or buy them from Moonbeam? Show your
calculations.
Requirement 1. Calculate the total expected manufacturing cost per unit of making CMCBS in 2018.
Total Manufacturing
Manufacturing
Costs of CMCB
Cost per Unit
3.
Now suppose that if Sunshine purchases CMCBS from Moonbeam, its best alternative use of the capacity currently used for
CMCBS is to make and sell special circuit boards (CB3S) to the Eleanor Corporation. Sunshine estimates the following
incremental revenues and costs from CB3S:
Direct materials
Direct manufacturing labor
Total expected incremental future revenues
$1,900,000
Variable batch manufacturing costs
Total expected incremental future costs
$2,025,000
On the basis of financial considerations alone, should Sunshine make CMCBS or buy them from Moonbeam? Show your
calculations.
Fixed manufacturing costs
Avoidable fixed manufacturing costs
Unavoidable fixed manufacturing costs
More info
Total manufacturing costs
Sunshine manufactured 9,000 CMCBS in 2017 in 50 batches of 180 each. In
2018, Sunshine anticipates needing 14,000 CMCBS. The CMCBS would be
produced in 100 batches of 140 each. The Moonbeam Corporation has
approached Sunshine about supplying CMCBS to Sunshine in 2018 at $350 per
CMCB on whatever delivery schedule Sunshine wants.
Transcribed Image Text:- X
Data table
Current Costs Expected Costs
in 2017
in 2018
Variable manufacturing costs
Direct material cost per CMCB
200 $
165
Direct manufacturing labor cost per CMCB
35
27
Variable manufacturing cost per batch for setups, materials
handling, and quality control
1,500
1,400
Fixed manufacturing cost
Fixed manufacturing overhead costs that can be avoided if CMCBS
are not made
450,000
420,000
Fixed manufacturing overhead costs of plant depreciation,
insurance, and administration that cannot be avoided even if
CMCBS are not made
540,000
1,960,000
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