question archive 1) Each year, Tall Trees surveys 7,500 former and prospective customers regarding satisfaction and brand awareness

1) Each year, Tall Trees surveys 7,500 former and prospective customers regarding satisfaction and brand awareness

Subject:AccountingPrice: Bought3

1) Each year, Tall Trees surveys 7,500 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to Regional Survey Associates, who have offered to conduct the survey and summarize results for $30,600. Jason Miller, the president of Tall Trees, believes that Regional Survey Associates will do the job with a higher quality than his company has been doing, but is unwilling to spend more than $10,000 above the current costs. The head of bookkeeping for Tall Trees has prepared the following summary of costs related to the survey in the prior year.

 

Mailing: $16,600    

                                                                

Printing (done by Lester Print Shop): $4,500

 

Salary of Paul Lane, part-time employee who stuffed envelopes and summarized

data when surveys were returned: (100 hours X $15)  $1,500

 

 

Share of depreciation of computer and software used

to track survey responses and summarized results:    $1,100

 

Share of electricity/phone/etc. based on square

feet of space occupied by Pat Fisher vs. entire company:  $500

 

-What is the incremental cost of going outside versus conducting the survey as in the past?

-Round to two decimal places.

 

 

2) Layton Corporation produces a jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below:

 

 

Cost per Unit

Variable costs

 

Direct material $960

 

Direct labor 600

 

Variable overhead 300

 

 

 

 

Cost Per Unit

Fixed costs

 

Depreciation of equipment 500

 

Depreciation of building 300

 

Supervisory salaries 300

 

 

The company has an offer from Durable 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? (Please state solution in a per-unit format and is a positive number)

-Round to two decimal places.

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