1) Exercise 6-6A (Algo) Special order decision LO 6-2 Thornton Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Thornton's normal sales territory, asks Thornton to pour 47 slabs for Lancing's new development of homes. Thornton has the capacity to build 480 slabs and is presently working on 200 of them. Lancing is willing to pay only $2,530 per slab. Thornton estimates the cost of a typical job to include unit-level materials, $870; unit-level labor, $490; and an allocated portion of facility-level overhead, $1,240. Required Calculate the contribution to profit from the special order. Should Thornton accept or reject the special order to pour 47 slabs for $2,530 each? Contribution to profit Should Thornton accept or reject the special order? 2) Exercise 6-10A (Algo) Outsourcing decision LO 6-3 Vernon Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Vernon produces and sells only 6,300 bikes each year. Due to the low volume of activity, Vernon is unable to obtain the economies of scale that larger producers achieve. For example, Vernon could buy the handlebars for $41 each; they cost $44 each to make. The following is a detailed breakdown of current production costs. Item Unit Cost Total Unit-level costs Materials $17 $ 107,100 Labor 75,600 Overhead 18,900 Allocated facility-level costs 75,600 Total $44 $277,200 12 3 12 After seeing these figures, Vernon's president remarked that it would be foolish for the company to continue to produce the handlebars at $44 each when it can buy them for $41 each. Required Calculate the total relevant cost. Do you agree with the president's conclusion? Total Per Unit Total relevant cost Do you agree with the president's conclusion