04 Mar Eradicate, Inc., produces and sells a line of inse
Eradicate, Inc., produces and sells a line of insect repellants that are sold primarily in the summer months. Recently, the chief operating officer has become interested in possibly manufacturing a repellant, ?~?~Halt” that can prevent a person from being attacked by use of a ?~?~pepper” repellant. The appeal of this product is that it would have year-round sales and would help stabilize the income of the company.The product, however, must be sold in a specially designed spray can that will be safe from being discharged accidentally. The product will be sold in cartons that hold 24 cans of the repellant. The sales price will be $96 per carton. The plant is now operating at only 65% of its total capacity, so no additional fixed costs will be incurred. However, a $100,000 fixed overhead charge will be allocated to the new product from the company’s present total of fixed costs.Using the current estimates for 100,000 cartons of ?~?~Halt” as a standard volume, the following costs were developed for each carton, including the cost of the can:Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Overhead (includes allocated fixed charge) . . . . . . . . . 4Total cost per carton . . . . . . . . . . . . . . . . . . . . . . . . . $22Eradicate, Inc., has requested a bid from a manufacturer of specialty dispensers for a purchase price of an empty can that could be used for the new product. The specialty company offered a price of $5 for a carton of cans. If the proposal is accepted, Eradicate, Inc., estimates that direct labor and variable overhead costs would be reduced by 10% and direct materials would be reduced by 20%.Required:1. Should Eradicate make or buy the special cans?2. What would be the maximum purchase price acceptable to Eradicate for the cans?
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.