Yardwork Tools Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data concerning the decision are as follows: Expected annual sales of tools (in units) 660,000 Average selling price of tools $11 Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD) 27,300 Current exchange rate 9,100 NTD = $1 Variable manufacturing costs $2.85 per unit Incremental annual fixed manufacturing costs associated with the new product line $310,000 Variable selling and distribution costsª $0.50 per unit Annual fixed selling and distribution costsª $250,000 ªSelling and distribution costs are the same regardless of whether the tools are manufactured in Maryland or Requirement 1. Should Yardwork Tools Corp manufacture the 660,000 garden tools in the Maryland facility or purchase them from the supplier in Taiwan? Explain. The cost of manufacturing 660,000 garden tools in the Maryland facility is and the cost of purchasing 660,000 garden tools from the Taiwan supplier is .

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Yardwork Tools

Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data concerning the decision are as follows:

Expected annual sales of tools (in units)	660,000
Average selling price of tools	$11
Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD)	27,300
Current exchange rate	9,100 NTD = $1
Variable manufacturing costs	$2.85 per unit
Incremental annual fixed manufacturing costs associated with the new product line	$310,000
Variable selling and distribution costsª	$0.50 per unit
Annual fixed selling and distribution costsª	$250,000