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D E F G H Birders Ltd. manufactures and sells bird feeders. The company currently...

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Accounting

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D E F G H Birders Ltd. manufactures and sells bird feeders. The company currently manufactures all the component parts including a wooden door. The company's unit product cost, based on based on a production level of 20,000 doors per year is as follows: Per Door Total Direct materials $8.00 5 Direct labour 10.00 5 Variable manufacturing overhead 3.00 Fixed manufacturing overhead, traceable 6.00 $120,000 3 Fixed manufacturing overhead, allocated# 12.00 240,000 e Unit product cost $39.00 0 1 Depreciation of special equipment 40% 2 Supervisory salaries 60% 3 4 # allocated on the basis of direct labour-hours S An outside supplier has offered to supply the doors to Birders Ltd. for only $25 per door. If the doors were purchased, Birders Ltd. 6 could use the freed up capacity to launch a new product that would generate $30,000 in segment margin for the year. 27 8 Required: 19 Should Birders Ltd. accept the supplier's offer? (5 marks) 20 22 23 Make Per unit Total Buy Per unit Total Number of units Sheet1 New Make Per unit Total Buy Per unit Total Number of units Total relevant costs Decision: Reason

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