What is the incremental savings of buying the valves

Reference no: EM13273061

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 $900 Direct labor 600 Variable overhead 300 Fixed costs Depreciation of equipment 500 Depreciation of building 300 Supervisory salaries 300 The company has an offer from Duvall Valves to produce the part for $2,000 per unit and supply 1,000 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 $55,000 per year. What is the incremental savings of buying the valves?

Reference no: EM13273061

Questions Cloud

What is the standard deviation of a two-asset portfolio : What is the standard deviation of a two-asset portfolio if one of the assets has a standard deviation of 0.30, the other asset has a standard deviation of 0.15, and the correlation coefficient between the two assets is 0.15 if ten percent of the p..

Peter hired a cleaning service to clean the rugs : The vacuum cleaner was delivered on Friday, the day before the party, when the rugs in Peter's home were quite dirty. The vacuum cleaner did not work properly. Peter notified the seller, who responded by saying that nothing could be done until ..

Evaluation of the effectiveness of the health care system : What is your evaluation of the effectiveness of the U.S. health care system in the context of delivery, finance, management, and/or sustainability? What are the issues that prompted a need for health care reform?

Consider a three-year project with the following information : Consider a three-year project with the following information: initial fixed asset investment = $694,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $33.95; variable costs = $22.50; fixed costs = $209,50..

What is the incremental savings of buying the valves : However, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $55,000 per year. What is the incremental savings of buying the valves?

Determine the frequency of the car horn : A man driving a car toward a large vertical wall sounds his horn. The car is traveling at 92 km/h. What is the frequency of the car horn

Prosecutor in a burglary case : You are a prosecutor in a burglary case. You want the defendant to plead guilty, so you stack the charges against him. You add a felony theft charge and misdemeanor theft charge to the burglary complaint hoping the defendant will be compelled to plea..

Eliminate or minimize each of these anticipated challenges. : Examine two (2) approaches that the original company you selected has taken in order to embrace technological advancements for innovation and thus improve business offerings. Anticipate three (3) potential technological challenges the company ..

What are the risks of not hedging : You looked online and found that June T-bond future psi are trading at 111'25. What are the risks of not hedging, and how might TS hedge this exposure? In your analysis, consider what would happen if interest rates all increased by 1%.

User Account

All Pages