Hanson Inc

question 100

Essay

Hanson Inc. , makes 1, 000 units per year of a part called a prositron for use in one of its products.Data concerning the unit production costs of the prositron follow: An outside supplier has offered to sell Hanson, Inc.all of the prositrons it requires.If Hanson, Inc.decided to discontinue making the prositrons, 10% of the above fixed manufacturing overhead costs could be avoided.
Required:
a.Assume Hanson, Inc.has no alternative use for the facilities presently devoted to production of the prositrons.If the outside supplier offers to sell the prositrons for $850 each, should Hanson, Inc.accept the offer? Fully support your answer with appropriate calculations.
b.Assume that Hanson, Inc.could use the facilities presently devoted to production of the prositrons to expand production of another product that would yield an additional contribution margin of $50, 000 annually.What is the maximum price Hanson, Inc.should be willing to pay the outside supplier for prositrons?

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Definitions:

Neural Activity

The electrical and chemical processes that occur within neurons, contributing to brain functions such as thought and action.

Meditation

A practice where an individual uses a technique – such as mindfulness, or focusing the mind on a particular object, thought, or activity – to train attention and awareness, and achieve a mentally clear and emotionally calm and stable state.

EEG Recordings

Electrical recordings of the brain's activity, captured through electrodes placed on the scalp, used in diagnosing certain neurological conditions and in research.

Consciousness

The state of being aware of and able to think about one's own existence, sensations, thoughts, surroundings, etc.