Differential Analysis-Free-Samples for Students-Myassignmenthelp

Question: With references, and execute your approach. Provide an answer to the case studys question with a recommendation. Case Study: Assume that a firm has prepared the following cost estimates for the manufacture of a sub assembly component based on an annual production of 8,000 units. Per Unit Total Direct materials $5 $40,000 Direct labor $4 $32,000 Variable factory overhead applied $4 $32,000 Fixed factory over head applied (150% of direct labor cost) $6 $48,000 Total Cost $19 $152,000 The supplier has offered to provide the subassembly at a price of $16 each. Two-thirds of fixed factory overhead, which represents executive salaries, rent, depreciation, and taxes, continue regardless of the decision. Should the company buy or make the product? Answer: Introduction: The overall assessment mainly helps in depicting the overall viability of make and buy option, which might allow the company to generate profitability. The relevant calculation could mainly help in detecting viability of the decision, which needs to be conducted by the company. The relevant valuation mainly states, viability of the approach for generating higher revenue from the operations. Providing relevant solution regarding make or buy decision: Particulars Total of 8000 units Per unit Make Buy Make Buy Purchase price 128,000 16 Direct material 40,000 5 Direct labour 32,000 4 Variable overhead 32,000 4 Fixed overhead 16,000 2 Total relevant cost 120,000 128,000 15 16 Difference in favour of making 8,000 1 The above table mainly represents the overall calculations, which could directly help in generating higher revenue from investments. The relevant calculation also states that making the product could mainly help in generating higher revenue from investments. The overall buying process will mainly reduce profits by $1, which might hamper profitability of the organisation. Cumby (2013) mentioned that the make or buy decisions are mainly made by the management after careful evaluation of the cost factors. Hence, from the overall evaluation it could be identified that make option is a much better way for the company. Explain the approach to the problem: There are mainly two approaches, which could be conducted by the company, where it will make or buy the relevant products for selling the products. The approach could mainly allow the company to generate higher revenue from investments. The relevant buy approach could mainly reduce the overall time input, which needs to be conducted by the company. Cumby (2013) mentioned that with the help of outsourcing companies in the current era are mainly able to reduce the overall cost of product and maximise their profitability. Furthermore, the making process can be considered by the management, which might help in generating higher revenue from investments. The overall method could mainly allow the organisation to generate higher revenue from investment, which in turn could increase their stability and financial conduction (Johansson, 2015). The outsourcing measures where the company buys the product mainly allow the company to reduce all the fixed and other costs, when demand for the profit s is not high. This directly allows the company to reduce costs in lean seasons and continuously generate higher revenue from investments. From the overall evaluation of the calculation, viability of making option could be detected, which might help in understating the boost in profits generated from the method. The making option is considered the best viable option for the company, where the overall profits will increase by $1 per unit and $8,000 for 8,000 units. Kalaignanam, Kushwaha Swartz (2017) stated that companies with the help of adequate cost valuation directly help in understanding the measures, which could reduce costs and increase profitability. However, maintaining a relevant production measure could directly allow the company to compensate for any kind of increased demand, where the relevant cost of the product would reduce. Hence, the maintenance of the production facility and make option could help in supporting higher production needs of the consumers. Supporting the approach with relevant understanding: From the overall evaluation, of the calculation making the product could mainly help in generating higher revenue from investment. Moreover, the company with help of making attributes could help in generating higher revenue from production. However, the making process could lose its friction only if the demand for the product reduces which directly increase cost and reduce viability of the investment option (Nielsen, Mitchell Nrreklit, 2015). Furthermore, the increment in demand of the product will directly reduce cost and allow the company to generate higher revenue, while maintaining the competition level in the market. Recommendation Therefore, with the help of make option the company will mainly reduce cost by $1 per unit or get a total profit of $8,000 for 8,000 units. Therefore, it could mainly help in generating higher revenue from investment, as total cost of the product will reduce. Hence, the use of making option is a viable approach than buying option for the company. References: Alfaro, L., Antrs, P., Chor, D., Conconi, P. (2015). Make or buy decisions over upstream and downstream inputs: An investigation of firm boundaries along value chains.VoxEu. org,14. Cumby, J. A. (2013). Business 2101: managerial accounting. Program 13-03. Make or buy decision. Johansson, T. (2015). A critical appraisal of the current use of transaction cost explanations for government make-or-buy choices: Towards a contingent theory and forms of tests.Public Management Review,17(5), 661-678. Jussila, K., Gylling15, M., Saarinen, M. (2014). CASE 2 The Dynamics of Make vs. Buy Decisions in a Global EconomyA Firm Study14.GLOBAL OPERATIONS NETWORKS, 307. Kalaignanam, K., Kushwaha, T., Swartz, T. A. (2017). The Differential Impact of New Product Development Make/Buy Choices on Immediate and Future Product Quality: Insights from the Automobile Industry.Journal of Marketing,81(6), 1-23. Nielsen, L. B., Mitchell, F., Nrreklit, H. (2015, March). Management accounting and decision making: Two case studies of outsourcing. InAccounting Forum(Vol. 39, No. 1, pp. 64-82). Elsevie