1.

DeglerDegler

Computers makes

5 comma 9005,900

units of a circuit board, CB76 at a cost of

$ 230$230

each. Variable cost per unit is

$ 190$190

and fixed cost per unit is

$ 40$40.

Peach Electronics offers to supply

5 comma 9005,900

units of CB76 for

$ 210$210.

If

DeglerDegler

buys from Peach it will be able to save

$ 15$15

per unit in fixed costs but continue to incur the remaining

$ 25$25

per unit. Should

DeglerDegler

accept Peach's offer? Explain.

2.

APAP

Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information:

$

$

$

$

$

$

$

$

$

1.

DeglerDegler

Computers makes

5 comma 9005,900

units of a circuit board, CB76 at a cost of

$ 230$230

each. Variable cost per unit is

$ 190$190

and fixed cost per unit is

$ 40$40.

Peach Electronics offers to supply

5 comma 9005,900

units of CB76 for

$ 210$210.

If

DeglerDegler

buys from Peach it will be able to save

$ 15$15

per unit in fixed costs but continue to incur the remaining

$ 25$25

per unit. Should

DeglerDegler

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:

Unit relevant cost