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In Sydney Company it costs $32 per unit ($24 variable and $8 fixed) to make a product that normally sells for $49. A foreign wholesaler
In Sydney Company it costs $32 per unit ($24 variable and $8 fixed) to make a product that normally sells for $49. A foreign wholesaler offers to buy 5,000 units at $28 each. Sydney will incur special shipping costs of $2 per unit. Assuming that Sydney has excess operating capacity, indicate the net income (loss) Sydney would realize by accepting the special order. Emil Manufacturing incurs unit costs of $8.20 ($5.40 variable and $2.80 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 12,000 of the assembly parts at $5.20 per unit. If the offer is accepted, Emil will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, Emil will realize by buying the part. Green Inc. makes unfinished bookcases that it sells for $64.00. Production costs are $40.00 variable and $12.00 fixed. Because it has unused capacity, Green is considering finishing the bookcases and selling them for $79.00. Variable finishing costs are expected to increase by $7.00 per unit with no increase in fixed costs. Prepare an analysis on a per unit basis showing whether Green should sell unfinished or finished bookcases. Chudzick Company has a factory machine with a book value of $98,000 and a remaining useful life of 5 years. A new machine is available at a cost of $240,000. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $580,000 to $510,0000. Prepare an analysis showing whether the old machine should be retained or replaced. Bitterman, Inc. manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $5,000 from sales $240,000, variable costs $185,000, and fixed costs $60,000. If the Big Bart line is eliminated, $10,000 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated
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