The company has an offer from duvall valves to produce the

Reference no: EM13588982

Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below:

		Cost per Unit
Variable costs
Direct material		$950
Direct labor		660
Variable overhead		320
Total variable costs		$1,930
Fixed costs
Depreciation of equipment		490
Depreciation of building		210
Supervisory salaries		310
Total fixed costs		1,010
Total cost		$2,940

The company has an offer from Duvall Valves to produce the part for $2,070 per unit and supply 1,020 valves (the number needed in the coming year). If the company accepts this offer and shuts down production of valves, production workers and supervisors will be reassigned to other areas. The equipment cannot be used elsewhere in the company, and it has no market value. However, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $55,100 per year.

Should the company make or buy the valve?
Incremental costsavings of buying valves is . The company should makebuy the valves.

Reference no: EM13588982

Questions Cloud

A bottle has a mass of 3500 g when empty and 9840 g when : question a bottle has a mass of 35.00 g when empty and 98.40 g when filled with water. when filled with another fluid

What are the four symbols used in a data flow diagram and : what are the four symbols used in a data flow diagram and what does each of the symbols mean? and what is the

Assuming the maximum pressure difference his lungs can : in a movie tarzan evades his captors by hiding underwater for many minutes while breathing through a long thin reed.

Cmpute the condition number for each root of the equation : 1- compute the condition number of each eigenvalues of the matrix 0 -1 1 2b and determine for which values of b the

The company has an offer from duvall valves to produce the : howell corporation produces an executive jet for which it currently manufactures a fuel valve the cost of the valve is

You are the new chief financial officer for callahan : you are the new chief financial officer for callahan automotive and have been asked by the chief executive officer to

Calculate the incremental profit or loss associated with : finns seafood restaurant has been approached by new england investments which wants to hold an employee recognition

What is the speed of the train at the end of this distance : a train on a straight level track has an initial speed of 37.0 kmh . a uniform acceleration of 1.10 ms2 is applied

The company will continue to incur the total amount of its : diego company manufactures one product that is sold for 71 per unit in two geographic regions-the east and west

User Account

All Pages