Baird Bike Company makes the frames used to build its bicycles. During 2018, Baird made 23,000 frames; the costs incurred follow Unit-level materials costa (23,000 units $46) Unit-level labor costs (23,000 units x $51) Unit-level overhead costs (23,000 $14) Depreciation on manufacturing equipment Bike frame production supervisor's salary Inventory holding costs Allocated portion of facility-level costs Total costs $1,058,000 1,173,000 322,000 86,000 69,500 270,00 530,000 $3,508,500 Baird has an opportunity to purchase frames for $109 each. Additional Information 1. The manufacturing equipment, which originally cost $570,000, has a book value of $451,000, a remaining useful life of four years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $75,000 per year. 2. Baird has the opportunity to purchase for $930,000 new manufacturing equipment that will have an expected useful life of four years and a salvage value of $59,600. This equipment will increase productivity substantially, reducing unit-level labor costs by 70 percent. Assume that Baird will continue to produce and sell 23,000 frames per year in the future. 3. If Baird outsources the frames, the company can eliminate 70 percent of the inventory holding costs. Required a. Determine the avoidable cost per unit of making the bike frames, assuming that Baird is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative dato, Required a. Determine the avoidable cost per unit of making the bike frames, assuming that Baird is considering the alternatives of making the b. Assuming that Baird is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per c. Assuming that Baird is considering whether to either purchase the new equipment or outsource the bike frame, calculate. product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Baird outsource the bike frames? unit to produce the bike frames using the new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment Book Print Complete this question by entering your answers in the tabs below Required A Required B Required C Determine the avoidable cost per unit of making the bike frames, assuming that Baird is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Baird outsource the bike frames? (Round your answer to 2 decimal places.) Avoidatle cost per unit for making the product Baird should outsource the bike frames? per unt Required B > Complete this question by entering your answers in the tabs below Required ARequired B Required C Assuming that Baird is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit using the old equipment. Calculate the increase or decrease in the company's profit if the company to produce the bike frames uses new equipment. (Round "Avoidable cost per unit to 2 decimal places.) Show lessA Avoidable cost per unit Profit must by Required A Required C> Complete this question by entering your answers in the tabs below. Required A Required B Required C Assuming that Baird is considering whether to either purchase the new equipment or outsource the bike frame, calculate. (Do not round intermediate calculations.) Should Baird purchase new equipment or outsource? Profit must by Required B
