A proposal is received from an outside supplier who will make and ship the pens for $5 per pen. With the newly freed capacity, Class plans on making mechanical pencils that would contribute $1 per pencil. Class can produce 30,000 of the new pencils per month. None of the fixed costs nor variable selling costs (Class has to sell the pens whether the pens are manufactured or purchased) from the luxury pen could be avoided, but production of the new pencils will require an additional $5,000 in fixed costs per month. Should Class purchase the new pens?

After Class Practice 8-1 (2HW) The following are the Class Company's unit costs of manufacturing and marketing a luxury pen at a level of 20,000 units per month: Direct materials $1.00 Direct labor 1.20 Variable overhead .80 Fixed overhead .50 Variable selling and administrative 1.50 Fixed selling and administrative .90 Consider each of the following questions independently. Unless otherwise stated, assume a selling price of $10 per pen. The first three questions review concepts covered in previous chapters. ck figure: . 5091 units e. Decrease in income if buy(15,000) e. 2000/1000 A proposal is received from an outside supplier who will make and ship the pens for $5 per pen. With the newly freed capacity, Class plans on making mechanical pencils that would contribute $1 per pencil. Class can produce 30,000 of the new pencils per month. None of the fixed costs nor variable selling costs (Class has to sell the pens whether the pens are manufactured or purchased) from the luxury pen could be avoided but production of the new pencils will require an additional $5,000 in fixed costs per month. Should Class purchase the new pens