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.
