#29

Kando Company incurs a $10.00 per unit cost for Product A, which it currently manufactures and sells for $13.50 per unit. Instead of manufacturing and selling this product, the company can purchase it for $6.00 per unit and sell it for $10.80 per unit. If it does so, unit sales would remain unchanged and $6.00 of the $10.00 per unit costs of Product A would be eliminated. 1. Prepare Incremental cost analysis. Should the company continue to manufacture Product A or purchase it for resale?

Manufacture Purchase Product A Sales Costs: Avoidable costs Unavoidable costs Cost to purchase Total costs The company should