Problem 1 MAKE OR BUY Marshall Company currently manufactures 40,000 units per year of one of its crucial parts. Direct materials are $1.50 per unit, direct labor is $0.60 per unit, and variable manufacturing overhead costs are $1 per unit. Fixed costs related the company buys the part are $50,000, and allocated fixed costs that are unavoidable are making the part that could be avoided if $45,000 per year. Marshall is considering buying 40,000 units of the part from a supplier for a quoted price of $3.80 per unit.

Problem 2 SELL OR PROCESS FURTHER A company has 8,000 pounds of chicken that is nearing its expiration date. Each pound has a cost of $2. The chicken could be sold as-is for $6 per pound or roasted and sold in the dell. The cost of roasting the chicken will be $3.50 per pound, and each pound of roasted chicken could be sold for $8.50. (a) Perform an analysis to determine whether the company should sell the chicken as-is or process it further into roasted chicken. Show your work! (b) Should the company sell as-is or process further? Why?