DETERMINE whether U-Beaut should accept Filters-R-Us offer

Assignment Help Macroeconomics

Reference no: EM132135693

Question - The fuel filter section of U-Beaut Tractors Pty currently manufactures two range of filters for its farm equipment production. The standard line of filters is produced in annual quantities of 20,000 units, whereas only 5,000 units of the special filters for their high-end tractors are produced annually on a separate line. Each of the lines requires about the same amount of floor space. The expected annual costs of the fuel filters is summarised as follows:

	Standard	Special	Total
Variable cost
Direct Materials	$100,000	$30,000
Direct Labour	$190,000	$60,000
Power and Water			$37500
Fixed Cost
Heating and Light			$20,000
Depreciation	$72,000	$40,000
Administration overhead allocation			$50,000

Filters-R-Us has offered to sell U-Beaut 20,000 standard fuel filters for $17.00 per unit. If U-Beaut accepts the offer, some of the manufacturing facilities currently used to manufacture the standard filters could be rented to a local small start-up company at an annual rent of $40,000.

DETERMINE whether U-Beaut should accept Filters-R-Us's offer. JUSTIFY any assumptions that you have to make. EXPLAIN your decision, and DISCUSS what, if any, risks are associated with your decision.

Reference no: EM132135693

Questions Cloud

What is your total economic cost to be a full-time student : You have a full-time job but you decide to go to a college and be a full-time student. What is your total economic cost to be a full-time student

Is acting considered a good profession : Women never stepped foot or acted on the stage until the 17th Century, during England's Restoration Period .

Why does the field attract so many women : Is there a gender gap in public relations? Why does the field attract more women than men? How does each gender perceive careers in public relations?

Write down each firm profit function : There are two identical firms in the industry, which set their quantities produced simultaneously. The two firms face a market demand curve, Q = 120 - P, in whi

DETERMINE whether U-Beaut should accept Filters-R-Us offer : The standard line of filters is produced in annual quantities of 20,000 units, DETERMINE whether U-Beaut should accept Filters-R-Us's offer

What level of excess reserves does the bank now have : Suppose that Third National Bank has reserves of $20,000 and check able deposits of $200,000. The reserve ratio is 10 percent. The bank sells $20,000

Solutions for various analytics problems : Your task for this analytical project is to use analytical tool (i.e Watson Analytics) to explore, analyze and visualize one of the two given dataset

Find a value of the standard normal random variable : To find a value of the standard normal random variable? z, called z 0 0?, such that ?P( z greater than z 0 z > z0?)=.1922, which of the following is?

Discuss various sources of ideas for legislative proposals : Discuss the various sources of ideas for legislative proposals. Contrast the patronage system and the merit system as methods of hiring government employees.

User Account

All Pages