11.

Answer the following questions. 1. Dietrich Computers makes 5,200 units of a circuit board, CB76 at a cost of $290 each. Variable cost per unit is $180 and fixed cost per unit is $110. Peach Electronics offers to supply 5,200 units of CB76 for $270. If Dietrich buys from Peach it will be able to save $25 per unit in fixed costs but continue to incur the remaining $85 per unit. Should Dietrich 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. Data Table Old Machine New Machine $ 9,600 4 years years 4 years Original cost $ 10,500 Useful life 12 years Current age 8 years Remaining useful life 4 years Accumulated depreciation $ 7,000 Book value $ 3,500 Current disposal value (in cash) 2,900 Terminal disposal value (4 years from now) $ 0 Annual cash operating costs $ 17,500 Not acquired yet Not acquired yet Not acquired yet $ 0 12,500 Print Done 1. Dietrich Computers makes 5,200 units of a circuit board, CB76 at a cost of $290 each. Variable cost per unit is $180 and fixed cost per unit is $110. Peach Electronics offers to supply 5,200 units of CB76 for $270. If Dietrich buys from Peach it will be able to save $25 per unit in fixed costs but continue to incur the remaining $85 per unit. Should Dietrich 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 Dietrich Computers should Peach's offer. When comparing relevant costs between the choices, Peach's offer price is 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 Total relevant costs LN Manufacturing should the old machine. The cost to keep the machine is than the cost to replace the machine