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Unit 3 Individual Project
Presented in Partial Fulfillment
Of the Requirements for the Class
ACG420-0701A-10: Managerial Accounting and Organizational Controls
By
AIU Online
3rd November 2007
The Minnetonka Corporation is a company that produces and sells to wholesalers a highly successful line of water skis. They have decided to diversify to stabilize their sales throughout the coming year. The company has been considering the mass production of cross-country skis. After a considerable time of research, the company has finally come up with a cross-country ski. However management has hit a dilemma, the president of Minnetonka has decided to introduce only one version of the ski. If this item proves to be successful, the item will expand in the coming years.
1. Should the Minnetonka Corporation make or buy the bindings? Show calculations to support your answer.
My report will begin with my opinion that the Minnetonka Corporation should buy their own bindings as this shows the cost will be less per the set of skies. If the company chooses to go with this decision; this decision will give us the option to purchase the skates at about $79.50 rather than the original amount of $80.00. It will also be at a great advantage for us to make this purchase because of contract price with the contractors.
2. What would be the maximum purchase price acceptable to the Minnetonka Corporation for the bindings? Support your answer with an appropriate explanation.
We should try to maximize the profits by p ...