The Brain Teasers (TBT) specializes in creating and manufacturing board games for youth, Each game hasa unique game board to accompany the other pieces of the game. The company is at the tinai developmentstage of a new game called “Inverted World’ based on a recent ﬁctional book and subsequent ﬁim of thesame name. Since it is important that the game be on the shelves quickly to capitaiize on the advertisingand promotion done by the movie studio for the Him. the manager of TBT is considering an offer fromanother game manufacturer to suppiy the game boards for $5.60 per board. This is a common practice inthe game industry as the life of a toy is very short and there is a need to act quickly to get the product tomarket before demand shifts. TBT’s cost accountant has developed the following cost estimates for the production of the game board: Cost per Unit of Inverted WorldDirect material $3.20Direct labour 0.80Production overhead 1.53Corporate overhead 0.43Cost of game board $6.46 The accountant has aisc provided the foliowing information: – The board can be produced using current machinery that has a capacity to produce 500‘000 units permonth and is 50% utilized. – The anticipated demand torthe game wiil not exceed 50,000 units a month. according to the saies team, – Half of the production overhead is ﬁxed. – The corporate overhead allocation is based on 15% of the direct materials charge. Required: Compute monthly net beneﬁt of making the game boards than buy the game boards lrom the competitor.[Do not round intlnnediate calculations.) State whether TBT should make the game boards or buyI from the supplier. O YesO No
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