Alpha Company currently manufactures a component part, a wristband, for its main product, a wearable fitness tracker. The costs per unit of the wrist band are as follows:

Direct materials	$ 1.50
Direct labor	15.00
Variable overhead	8.00
Average fixed overhead	32.00
Total	$56.50

Beta Corp has contacted Alpha with an offer to supply 5,000 wristbands for $40.00 each. Alpha would eliminate $100,000 of fixed overhead if it accepts the proposal.

 

Task 1:

	A	B
1	What are the relevant costs per unit to make the wrist bands?
2	What are the relevant costs per unit to purchase the wristbands from Beta?
3	Should Alpha make or buy the wristbands?
4	If Alpha buys the wristbands, how will Alpha's profit change? If the answer is negative, please indicate with a minus sign.

Task 2;

	A	B
		Units
1	At what volume of wristband production would Alpha be indifferent to making or buying the wristbands?