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Answer the following questions. 1. Davanit Computers makes 5,600 units of a circuit board, CB76 at a cost of $200 each. Variable cost per
Answer the following questions. 1. Davanit Computers makes 5,600 units of a circuit board, CB76 at a cost of $200 each. Variable cost per unit is $160 and fixed cost per unit is $40. Peach Electronics offers to supply 5,600 units of CB76 for $180. If Davanit buys from Peach it will be able to save $15 per unit in fixed costs but continue to incur the remaining $25 per unit. Should Davanit accept Peach's offer? Explain. 2. LF Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: (Click the icon to view the information.) LF Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should LF Manufacturing replace the old machine? Explain. x 1. Davanit Computers ma offers to supply 5,600 uni unit. Should Davanit acce Begin by calculating the r Relevant costs: Data table Original cost Useful life Current age Remaining useful life Accumulated depreciation ost per unit is $40. Peach Electronics inue to incur the remaining $25 per Old Machine New Machine ero.) $ 10,900 10 years 8,200 3 years 7 years 0 years 3 years 3 years $ 7,630 Not acquired yet Book value $ 3,270 Not acquired yet Unit relevant cost Current disposal value (in cash) $ 2,700 Not acquired yet Terminal disposal value (3 years from now) $ 0 $ 0 Annual cash operating costs $ 17,500 $ 14,500
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