NAME: TA: PAGE 139 PART A ACCT 201 HANDOUT - MANAGERIAL DECISIONS (15 PTS) Azhai Corp. currently manufactures 10,000 units of part A123 each year to be used in the production of several of the company's products. The cost per unit of A123 is as follows: Direct Materials: $8.00 Direct Labor: $5.00 Variable Overhead: $4.00 Fixed Overhead: $4.50 Of the total fixed overhead assigned to A123, $5,000 is directly traceable to the part while the rest is common fixed overhead (hint: 0.50 per unit). An outside supplier has offered to sell the part to Azhai for $18. Azhai manufactures other products in the facility and will continue to do so. REQUIRED: Should Mason Company make or buy part 34R? (Circle One and Show Work) MAKE BUY PART B Demi Company has been approached by a new customer offering to purchase 2,500 units of Demi's product at a price of $5 each. The new customer is geographically separated from Demi's other customers and there would be no effect on existing sales. Demi has the capacity to produce 12,000 units but only plans to produce and sell 10,000 units in the coming year. The product normally sells for $8. The cost per unit is as follows: Variable Overhead: $0.50 Fixed Overhead: $2.50 Direct Materials: $1.00 Direct Labor: $1.50 REQUIRED: Should Demi accept the special order? (Circle One and Show Your Work) YES NO REQUIRED: List two qualitative factors that Demi should consider before accepting the special order ACCT 201 | MANAGERIAL ACCOUNTING I HANDOUT-MANAGERIAL DECISIONS | PAGE 1