Gilberto Company currently manufactures 82,000 units per year of one of its crucial parts. Variable costs are $2.80 per unit, fixed costs related to making this part are $92,000 per year, and allocated fixed costs are $79,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Gilberto is considering buying the part from a supplier for a quoted price of $4.00 per unit guaranteed for a three-year period.

Calculate the total incremental cost of making 82,000 and buying 82,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier?

Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV is four units per hour. The machines capacity is 2,500 hours per year. Both products are sold to a single customer who has agreed to buy all of the companys output up to a maximum of 4,250 units of Product TLX and 4,652 units of Product MTV. Selling prices and variable costs per unit to produce the products follow.

$ per unit	Product TLX				Product MTV
Selling price per unit		$	11.00			$	6.60
Variable costs per unit			3.30				3.96

Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round per unit contribution margins to 2 decimal places.)