Question 1 of 3 -78 E Waterwys mass produces a special connector unit that it normally sells for $1.00. It sells approximately 33,300 of tivese units each year. The variable costs for each unit are $240. A company in Canada that has been unable to produce enough of a simit connector to meet customer demand would like to buy 16,300 of these units at $2.70 per unit. The production of these units is near full capacity at Waterways, so to accept the offer from the Canadian company would require temporarily adding another shift to its production line. To do this would increase variable manufacturing costs by $0,30 per unit. However, variable selling costs would be reduced by $0.20 a unit. An irrigation company has asked for a special order of 2.200 of the connectors. To meet this special order, Waterways would not need an additional shift, and the irrigation company is willing to pay $3.10 per unit What are the consequences of Waterways agreeing to provide the 16,300 units to the Canadian company? Would this be a wise "Special order to accept? Waterways accept the special order because net income ~ bys e Textbook and Media Question 1 of 3 -/8 Should Waterways accept the special order from the irrigation company? Waterways accept the special order because net income by $ e Textbook and Media What would be the consequences of accepting both special orders? Accepting both special orders would net income by $ e Textbook and Media Question 2 of 3 > -18 Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for 30,82 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 423,000 of these units each year. Waterways decides to buy rather than produce the small fitting it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 500 of these units each year. The cost of the unit is $12.16. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,336, and the cost of producing the units would be $9,60 a unit Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting The company should the fitting. Incremental cost (savings will be 5 Textbook and Media Question 2 of 3 -18 1 What is Waterways'opportunity cost if it chooses to buy the small fitting and start manufacturing the timing unit? The opportunity cost is $ eTextbook and Media Would it be wise for Waterways to buy the fitting and manufacture the timing unit? The company should small fittings and the timing units e Textbook and Media
