Exercise A. Produce or buy an item (Value. 15 points) jusuy your answer The company BB Inc. manufactures an X part for its annual production. The following table presents information on production costs at a given level. + Production level 25,000 units Direct materials $8.20 Direct labor $10.50 Variable manufacturing overhead $4.90 Fixed overhead manufacturing costs $15.00 Total cost per unit $38.60 BB Inc. received an offer to purchase 25,000 units of the already manufactured for $35.35 per unit. There are fixed indirect $ 10 per unit that would remain even if they were purchased. However, buying the part would allow BB Inc. to rent the production area for $ 200,000 per year. Required: Prepare a report comparing both alternatives and that reflects how much the profit would increase or decrease if you decide to buy the piece. It must include all the computations performed. Exercise 5B: Consider accepting a special order to produce (Value: 20 points) The ROAR company manufactures a single product that sells for $ 17.00 each unit. The cost of each unit produced at a monthly production level of 10,000 units is: Direct cost materias! Direct labor Variable manufacturing overhead cos Fixed indirect manufacturing Fixed administrative expenses $2.80 $3.30 $.75 $4.60 $2.25 The total monthly production capacity is 12,000 units. A special order for 2,000 units was received at a purchase price of $ 14.00 per unit. Regular sales will not be affected by this order. Required: 1. How much will the monthly profit increase or decrease if ROAR accepts the special order? Please note that accepting the order will not affect the fixed costs. (15 points) 2. Suppose the company has 600 units of an earlier model of this item that were unsold last year. To dispose of the units, the company has to sell them at a reduced price through the normal sales channels. Identify the unit cost that is relevant for determining the minimum price at which these units can be available. Explain why you consider that to be the relevant cost. (5 points) Exercise 5C: Usefulness of a restricted resource (Value: 10 points) The School Pack company manufactures school bags with a very resistant plastic bottom. It has three models that are the best sellers. The following table provides you with information about thes nd Mod B $155 $60 Mod C $90.50 $27.50 Mod A Sale Price per Unit $115 Variable cost per Olit $30 Processing time in the plastic machine for each unit 3 mins Amount of plastic per unit 4 lbs The restricted resource is the processing time on the machine. 4 mins 5 lbs 1 min 3 lbs (AAAA LAAAA 1. Determine the highest and lowest performance model in using processing time as a constrained resource. 2. Determine the model with the highest and the lowest performance in the use of plastic if this is the restricted resource. 3. Determine the model with the highest contribution margin. Did this model turn out to be the top performer in the answers above? If not, explain why