Harold is considering whether to continue to make product A, or buy it completed from Rosie. Harold makes 200,000 of these units each year. Rosie is offering to sell product A to Harold for $60 a unit. Below is some information concerning the product

variable costs - 200,000 units at $58 per unit = $11,600,000

fixed costs $ 600,000

What are relevant costs

a. variable costs per unit?

b. total fixed costs?

c. total dollar amount of cost or savings to Harold - note if cost or savings.

d. should Harold take this offer, yes or no?

On further review, Harold believes that If Rosie makes the product, production supervisors with salaries of $350,000 will be eliminated.

What are relevant costs

e. variable costs per unit?

f. total fixed costs?

g. total dollar amount of cost or savings to Harold - note if cost or savings.

h. should Harold take this offer, yes or no?

Name two other concerns for Harold if he takes this offer

i. _________________

j. _________________