1. Answer the following questions. owing Computers makes 5.800 units of a circuit board, CB76 at a cost of $260 each. Variable cost per unit is $140 and Od cost per unit is $120. Peach Electronics offers to supply 5.800 units of CB76 for $240. if Dowling buys from Peach w be able to save $10 per unit in fixed costs but continue to incur the remaining $110 per unit. Should Dowing accept Peach's offer? Explain. 2. LN Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information (Click the icon to view the information.) LN Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should LN Manufacturing replace the old machine? Explain. 1. Dowling Computers makes 5.800 units of a circuit board. CR76 at a cost of $260 each. Variable cost per unit is $140 and fixed cost per unit is $120. Peach Electronics offers to supply 5.800 units of CB76 for $240. If Dowling buys from Peach it will be able to save $10 per unit in fixed costs but continue to incur the remaining $110 per unit. Should Dowling accept Peach's offer? Explain. Begin by calculating the relevant cost per unit. (If an input field is not used in the table, leave the input field empty, do not enter a zero.) Make Buy Relevant costs: (2) (3) SL Unit relevant cost Dowling Computers should (4) Peach's offer. When comparing relevant costs between the choices. Peach's offer price is (5) - than the cost to continue to produce. 2. LN Manufacturing is deciding whether to keep or replace an old machine. LN Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should LN Manufacturing replace the old machine? Explain. Begin by calculating the total relevant costs. (If an input field is not used in the table, leave the input field empty, do not enter a zero. Use parentheses or a minus sign for numbers to be subtracted.) Keep Replace Difference (7) |(8) chase Total relevant costs LN Manufacturing should (9) the cost to replace the machine. the old machine. The cost to keep the machine is (10) than 1: Data Table Old Machine New Machine Original cost $ 10,000 $ 9,000 Useful life 10 years 3 years Current age 7 years O years Remaining useful life 3 years 3 years Accumulated depreciation $ 7.000 Not acquired yet Book value $ 3,000 Not acquired yet Current disposal value (In cash) $ 2,100 Not acquired yet Terminal disposal value (3 years from now) $ 0 $ Annual cash operating costs $ 20,000 $ 14,500 (1) Unavoidable fixed costs per unit Variable costs per unit O Avoidable fixed costs per unit O Purchase price per unit O Total fixed costs per unit (2) O Avoidable fixed costs per unit O Purchase price per unit Total fixed costs per unit Unavoidable fixed costs per unit o Variable costs per unit (3) O Unavoidable fixed costs per unit Variable costs per unit (4) O O accept reject Avoidable fixed costs per unit Purchase price per unit Total fixed costs per unit (5) O higher O lower (6) O O Accumulated depreciation O Book value Cash operating costs O Cost of new machine Current disposal value of old machine Original cost of old machine Terminal disposal value of old machine (7) Accumulated depreciation Book value O Cash operating costs O Cost of new machine Current disposal value of old machine O Original cost of old machine Terminal disposal value of old machine (8) O Accumulated depreciation O Book value Cash operating costs (9) O keep replace O Cost of new machine Current disposal value of old machine Original cost of old machine Terminal disposal value of old machine (10) O greater less