For many years Futura Company has purchased the starters that it installs in its standard line of farm tractors. Due to a reduction in output, the company has idle capacity that could be used to produce the starters. The chief engineer has recommended against this move, however, pointing out that the per unit cost to produce the 50,000 starters needed would be greater than the current $12.40 per unit purchase price Per Unit $ 6.00 Total Direct materials Direct labor Supervision Depreciation Variable manufacturing ove Rent 3.00 1.50 $ 75,000 1.30 $65,000 0.70 0.60 30,000 rhead Total product cost $13.10 A supervisor would have to be hired to oversee production of the starters. However, the company has sufficient idle tools and machinery so that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $80,000 per period. Depreciation is due to obsolescence rather than wear and tear Required 1. Determine the total relevant cost per unit if starters are made inside the company. (Round your answer to 2 decimal places.) Relevant cost per unit 2. Determine the total relevant cost per unit if starters are purchased from an outside supplier. (Round your answer to 2 decimal places.) Relevant cost per unit 3. What is the increase or decrease in profits as a result of purchasing the starters from an outside supplier rather than making them inside the company? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) Profit would per period Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit) Product Selling price $ 95 $ 75 $ 85 Variable expenses Direct materials 28.50 22.50 5.95 Other variable expenses Total variable expenses Contribution margin Contribution margin ratio 28.50 57.00 $38.00 33.75 56.25 $18.75 53.55 59.50 $25.50 40% 251 30% Demand for the company's products is very strong, with far more orders each month than the company can produce with the available raw materials. The same material is used in each product. The material costs $8 per pound with a maximum of 6,000 pounds available each month Required a. Compute contribution margin per pound of materials used. (Round your intermediate calculations and final answers to 2 decimal places.) Contribution Margin r Pound Product A Product EB Product C b. Which orders would you advise the company to accept first, those for A, for B, or for C? Which orders second? Third? Product A Product B Product C