Decision on Accepting Additional Business Miramar Tire and Rubber Company has capacity to produce 264,000 tires. Miramar presently produces and sells 202,000 tires for the North American market at a price of $113.00 per tire. Miramar is evaluating a special order from a South American automobile company, Rio Motors. Rio Motors is offering to buy 31,000 tires for $95.35 per tire. Miramars accounting system indicates that the total cost per tire is as follows: Direct materials $43 Direct labor 16 Factory overhead (70% variable) 26 Selling and administrative expenses (40% variable) 23 Total $108 Miramar pays a sales commission equal to S% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $6.00 per tire. In addition, Rio has made the order conditional on Miramar Tire and Rubber Company receiving a Brazilan safety certification, Rio estimates that this certification would cost Miramar Tire $186.000. a. Prepare a differential analysis report for the proposed sale to Rio Motors. Round your answers to the nearest cent. Miramar Tire And Rubber Company Sell to Rio Motors Differential Analysis Report Per Unit Total l Differential revenue from accepting special offer Diferential costs from accepting special offer: (Enter per unit cost amounts as positive values; enter the per unit cost savings as a negative value). Direct materials Direct labor v Variable factory overhead v Variable selling and administrative v Less avoided sales commission Additional shipping costs Variable special offer product cost v Incremental certification costs v Total differential costs Differential income from accepting special order Feedek Oheck My W a. Follow Exhibit 11 in the text. Subtract the additional costs from the additional revenue. The variable selling and administrative expenses are 40% of $23, less S% of $113 for the avoided sales commission per order. Also, be sure to add in the additional shipping. b. What is the minimum price per unit that would be financially acceptable to Miramar? Round your answer to the nearest cent.

Adiwele Ltd has a financial year end of 31 March. The entity manufactures Compact Discs for resale. The manufacturing cost per compact disc is R2 per unit. Finished units of the compact disc are sold at R2.5 per unit. On 31 March 2021, Adiwele Ltd had 100 500 units of compact discs in stock. To sell this products Adiwele Ltd will incur the following costs: Sales commission of 20 cents per unit, Additional designing costs of 25 cents per unit, Advertising and packaging costs of 23 cents per unit, Salaries for administrative staff of R6 000 per month. Adiwele Ltd measures inventory at lower of cost and net realisable value as per IAS 2, Inventories according to IFRS at year end. What is the value of the closing inventory on 31 March 2021 as per IAS 2? 1.251 250 2. 201 000 3. 208 035 4. 136 035 5. 244 215

Waterways mass-produces a special connector unit that it normally sells for $3.60. It sells approximately 31,700 of these units each year. The variable costs for each unit are $2.10. A company in Canada that has been unable to produce enough of a similar connector to meet customer demand would like to buy 16,500 of these units at $2.40 per unit. The production of these units is near full capacity at Waterways, so to accept the offer from the Canadian company would require temporarily adding another shift to its production line. To do this would increase variable manufacturing costs by $0.30 per unit. However, variable selling costs would be reduced by $0.20 a unit.An irrigation company has asked for a special order of 2,100 of the connectors. To meet this special order, Waterways would not need an additional shift, and the irrigation company is willing to pay $3.00 per unit.

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A company is currently using a supplier to make required components. The supplier changes an annual setup cost of $5,000 regardless of the number of parts the company purchases in a single year. In addition to this annual setup fee, the supplier uses the following pricing scheme: # of units $/unit 1- 100 $1,000 each 101 - 500 $800 each 501 - 750 $600 each 751 or more $500 each The company is now exploring the possibility of producing the same component in-house. The company expects to need more than 750 units per year for the next 5 years. The following information describes their in-house production solution: The annual Capital Recover & Return for the needed equipment = $300,000 per year Material Cost per unit = $250 Annual Operation and Maintenance Costs = $100,000 Annual Labor Costs = $150,000 Annual Overhead Costs = $50,000 Question: What is the Breakeven Quantity for this Make / Buy Decision?