Question : 41) A decision as to whether to insource or outsource a(n), : 1196067

 

41)

A decision as to whether to insource or outsource is a(n), 41)

______ A)

idle capacity decision. B)

short-run focus decision. C)

production scheduling analysis. D)

product mix decision. E)

make/buy decision.

42)

Crest Information Technologies manufactures three sizes of copiers: light usage, medium usage, and heavy usage. Potential sales include 200 units of light, 240 units of medium, and 200 units of heavy per month. The maximum machine-hours available is 12,000 per week. Product information is provided below.

 

Light    Medium     Heavy

Marketing Costs

Variable120240400

Fixed$300$500$1,000

Manufacturing costs:

Variable120240400

Fixed80       100         240

Machine-hours per unit2040100

 

What is the full product cost for heavy usage copiers? 42)

______ A)

$800 B)

$2,040 C)

$1,400 D)

$640 E)

$1,240

43)

A company is preparing its budgets for the upcoming year.

Current direct materials cost is $150,000, and current direct manufacturing labour is $1,000,000, both of which are expected to increase by 4% next year. Overhead costs currently are (for the year just ending) variable $18,000 and fixed $30,000.

The firm expects to achieve a 2% cost reduction in overhead costs by continuous improvement.

What is the company’s expected cost for the upcoming year if production is the same number of units as the current year? 43)

______ A)

$1,263,040 B)

$1,243,040 C)

$1,176,920 D)

$1,196,920 E)

$1,175,000

44)

Precision Sewing Company incorporates the services of Rosie’s Sewing. Precision purchases pre-cut dresses from Rosie’s. This is primarily known as 44)

______ A)

qualitative analysis. B)

outsourcing. C)

product specialization. D)

product needs analysis. E)

insourcing.

45)

Anchor Sign Company manufactures signs from direct materials to the finished product. This is an example of which of the following? 45)

______ A)

utilization of idle facilities B)

product needs analysis. C)

insourcing. D)

product specialization. E)

outsourcing.

46)

Which of the following would NOT be considered in a make or buy decision? 46)

______ A)

variable costs of production B)

unchanged fixed costs C)

potential rental income from space occupied by production area D)

potential usage of manufacturing capacity E)

qualitative factors

47)

Omark Corporation currently manufactures a subassembly for its main product. The variable costs per unit are $48, including a $6 charge based on estimated selling expenses.

 

R-Corp has contacted Omark with an offer to sell them 5,000 of the subassemblies for $44.00 each. Omark will eliminate $50,000 of fixed overhead if it accepts the proposal.

 

What is the total of the relevant costs for this decision ? 47)

______ A)

$210,000 B)

$240,000 C)

$30,000 D)

$290,000 E)

$245,000

48)

Omark Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows:

 

Direct materials$ 2.00

Direct labour20.00

Variable overhead10.00

Fixed overhead16.00

 

Reliance Corp has contacted Omark with an offer to sell them 5,000 of the subassemblies for $44.00 each. Omark will eliminate $50,000 of fixed overhead if it accepts the proposal.

 

Should Omark make or buy the subassemblies? What is the difference between the two alternatives? 48)

______ A)

make; savings = $60,000 B)

buy; savings = $10,000 C)

buy; savings = $50,000 D)

make; savings = $10,000 E)

buy; savings = $20,000

49)

Day Star collected the following information:

 

Cost to buy one unit:$48

Production costs per unit:

Direct materials$22

Direct labour$16

Variable overhead$2

Total fixed overhead$360,000

 

Day Star can sell 25,000 units per year, at $80 each.

The company also has an offer from a subsidiary to rent its plant facilities for $2,000,000.

The fixed overhead will be incurred in each alternative, but there will be a savings of $150,000 in the fixed costs under the renting alternative.

 

Based on the above information only, should Day Star make or buy the product or rent its facilities out? 49)

______ A)

buy B)

make C)

either make or rent – indifferent D)

either make or buy – indifferent E)

rent the facilities to the subsidiary

50)

Day Star’s subsidiary collected the following information:

 

Cost to buy one unit:$48

Production costs per unit:

Direct materials$22

Direct labour$16

Variable overhead$2

Total fixed overhead$360,000

 

The company can sell 25,000 units per year.

 

What production level is required for the company to be indifferent between making or buying the part if $260,000 of fixed costs can be eliminated? 50)

______ A)

0 units B)

1,000 units C)

12,500 units D)

32,500 units E)

26,500 units