The Svenson Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the following cost information about the costs of making CMCBs in 2020 and the expected costs in 2021:

Svenson manufactured 8,000 CMCBs in 2020 in 40 batches of 200 each. In 2021, Svenson anticipates needing 10,000 CMCBs. The CMCBs would be produced in 80 batches of 125 each.
The Minton Corporation has approached Svenson about supplying CMCBs to Svenson in 2021 at $300 per CMCB on whatever delivery schedule Svenson wants.

Required

1. Calculate the total expected manufacturing cost per unit of making CMCBs in 2021.
2. Suppose the capacity currently used to make CMCBs will become idle if Svenson purchases CMCBs from Minton. On the basis of financial considerations alone, should Svenson make CMCBs or buy them from Minton? Show your calculations.

3. Now suppose that if Svenson purchases CMCBs from Minton, its best alternative use of the capacity currently used for CMCBs is to make and sell special circuit boards (CB3s) to the Essex Corporation.
Svenson estimates the following incremental revenues and costs from CB3s:

Total expected incremental future revenues........................$2,000,000
Total expected incremental future costs...............................$2,150,000

On the basis of financial considerations alone, should Svenson make CMCBs or buy them from Minton? Show your calculations.

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Variable manufacturing costs Direct material cost per CMCB Direct manufacturing labor cost per CMCB Variable manufacturing cost per batch for setups, materials handling, and quality control Fixed manufacturing cost Fixed manufacturing overhead costs that can be avoided if CMCBs are not made Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if CMCBs are not made Current Costs in 2020 $ 180 50 1,600 320,000 800,000 Expected Costs in 2021 $ 170 45 1,500 320,000 800,000