please help answer questions for college course very important Exhibit 10-2 Auro

Question

please help answer questions for college course very important

Exhibit 10-2

Aurora is a calculator manufacturer. One of aurora’s best-selling calculator is DT920P, a dual power calculator with both solar and battery. The annual fixed costs for manufacturing the DT920P is $365,000, in addition, the total variable cost is $4.5 for each unit produced. Now the management in Aurora is considering outsourcing the production of some products for next year. They have a bid from an outside firm to produce the calculator for $6 per unit. Although it is more expensive per unit to outsource the calculator ($6 versus 4.5), the fixed cost can be avoided if Aurora purchases rather than manufactures the product.

Let us define the following:

            q = quantity (number of units) required

            FC = the fixed cost of manufacturing

            VC = the per-unit variable cost of manufacturing

            P = the per-unit variable cost of purchasing

Part of spreadsheet model is displayed following:

Question 16

Refer to Exhibit 10-2. The formula corresponding to the total cost for outsourcing (purchasing) q units of the calculator—TPC(q)— placed in cell B11 would be

=B4*B9+B6

=B6*B9

B4*B9+B6*B9

=B4+B6*B9

Question 17

Refer to Exhibit 10-2. For the DT920P calculator, if Aurora would like to manufacturer 10,000 units, what will be the value for B10 (TMC)?

$105,000.00

$410,000.00

$365,004.50

$425,000.00

Question 18

Refer to Exhibit 10-2. For the DT920P calculator, if Aurora would like to purchase 10,000 units, what will be the TPC ?

$410,000.00

$60,000.00

$105,000.00

$425,000.00

1 Aurora 3 Parameters 4 FC (Fixed cost of manufacturing) 365000 4.5 5 VC (Per unit variable cost of manufacturing) 6 P (Per-unit variable cost of purchasing) 6 8 Model 9 q (Quantity) 10000 10 TMC (Total cost to produce) 11 TPC (Total cost to outsource) 12 Savings due to Outsourcing 14

Explanation / Answer

Question 16 - The answer will be B. ( = B6*B9)

TPC ( Total cost to outsource) = P(per unit variable cost of purchasing) * q (Quantity) = B6*B9

Question 17 - The answer will be B. ($410,000.00)

TMC ( Total cost to produce) = Fixed cost + Variable cost = $365,000 + $4.5 * 10000 = $410,000.00

Question 18 - The answer will be B. ($60,000.00)

TPC ( Total cost to outsource) = Variable cost to outsource = $6 * 10000 = $60,000.00

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