Knowledge Check 01 Tyler Industries currently manufactures one of its crucial parts at a cost of $4.50 per unit. This cost is based on a normal production rate of 50,000 units per year. Direct materials costs are $1.50 per unit and direct laboris $1.00 per unit, incremental overhead costs related to making this part are $50,000 per year, and allocated fixed overhead costs are $50,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Tyler is considering buying the part from a supplier for a quoted price of $3.70 per unit guaranteed for a three-year period. What is the relevant cost of making the 50,000 units? $125,000 $185,000 $175,000 $225,000 Cold Company makes large containers of ice cream at a riable cost of $10 per container It usually sells the container for $15. Cold Company is operating at less than full capacity. A potential new customer is requesting containers of ice cream at a selling price of $12. Should Cold Company accept the special order? Yes, there will be a $12 increase in net income for every new container sold No, there will be a $3 decrease in net income for every new container sold No, there will be a $5 decrease in net income for every new container sold Yes, there will be a $2 increase in net income for every new container sold