Lakeside Corp manufactures garden tools in a factory in Hockeytown, Maryland. Recently, the company designed...
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Lakeside Corp manufactures garden tools in a factory in Hockeytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management needs to make a good decision about whether to produce this line in their existing space in Maryland, where space is available or to accept an offer from a manufacturer in Taiwan. Data concerning the decision are as follows:
Should Lakeside manufacture the 710,000 garden tools in the Maryland facility or purchase them from the supplier in Taiwan? Explain.
Lakeside lieves that the U.S. dollar may weaken in the coming months against the New Taiwanese Dollar and does not want to face any currency risk. Assume that Lakeside Garden Corp can enter into a forward contract today to purchase 24,000 NTD for $5.00. Should Lakeside Garden Corp manufacture the 710,000 garden tools in the Maryland facility or purchase them from the Taiwan supplier? Explain.
What are some of the qualitative factors that Lakeside Garden Corp should consider when deciding whether to outsource the garden tools manufacturing to Taiwan?
Expected annual sales of tools (in units) Average selling price of tools Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD) Current exchange rate Variable manufacturing costs Incremental annual fixed manufacturing costs associated with the new product line Variable selling and distribution costs a Annual fixed selling and distribution costs a 710,000 $ 8 24,000 10,000 NTD =$1 $3.30 per unit $390,000 $0.85 per unit $240,000 aSelling and distribution costs are the same regardless of whether the tools are manufactured in Maryland or imported. Requirement 1 . Should Riverside Garden Corp manufacture the 710,000 garden tools in the Maryland facility or purchase them from the supplier in Taiwan? Explain. The cost of manufacturing 710,000 garden tools in the Maryland facility is and the cost of purchasing 710,000 garden tools from the Taiwan supplier is
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Expected annual sales of tools (in units) Average selling price of tools Price quoted by Taiwanese company, in New Taiwanese Dollars (NTD) Current exchange rate Variable manufacturing costs Incremental annual fixed manufacturing costs associated with the new product line Variable selling and distribution costs a Annual fixed selling and distribution costs a 710,000 $ 8 24,000 10,000 NTD =$1 $3.30 per unit $390,000 $0.85 per unit $240,000 aSelling and distribution costs are the same regardless of whether the tools are manufactured in Maryland or imported. Requirement 1 . Should Riverside Garden Corp manufacture the 710,000 garden tools in the Maryland facility or purchase them from the supplier in Taiwan? Explain. The cost of manufacturing 710,000 garden tools in the Maryland facility is and the cost of purchasing 710,000 garden tools from the Taiwan supplier is
