Answer the following questions.
REQUIRED
1. Dalton Computers makes 5,000 units of a circuit board, CB76, at a cost of $230 each. Variable cost per unit is $180 and fixed cost per unit is $50. Peach Electronics offers to supply 5,000 units of CB76 for $210. If Dalton buys from Peach it will be able to save $20 per unit of fixed costs but continues to incur the remaining $30 per unit. Should Dalton accept Peach€™s offer? Explain.
2. AP Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information:

AP Manufacturing uses straight-line amortization. Ignore the time value of money and income taxes. Should AP replace the old machine? Explain.

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Old Machine New Machine Original cost Useful life Current age Remaining useful life Accumulated amortization Book value Current disposal value (in cash) Terminal disposal value (4 years from now) Annual cash operating costs $10,000 10 years 6 years S8,000 4 years 0 vearS 4 years Not acquired yet Not acquired yet Not acquired yet S6,000 $4,000 S2,500 $20,000 $12,000