Question:Brief Exercise 20-3

At Jaymes Company, it costs $30 per unit ($20 variable and $10 fixed) to make a product at full capacity that normally sells for $45. A foreign wholesaler offers to buy 3,000 units at $25 each. Jaymes will incur special shipping costs of $2 per unit. Assuming that Jaymes has excess operating capacity, indicate the net income (loss) Jaymes would realize by accepting the special order.(Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Reject Order	Accept Order	Net Income Increase (Decrease)
Revenues	$	$	$
Costs
Variable manufacturing
Shipping
Net income (loss)	$	$	$

Should the special order be accepted or rejected?

The special order should beacceptedrejected.

Brief Exercise 20-4Manson Industries incurs unit costs of $8.00 ($5 variable and $3 fixed) in making a subassembly part for its finished product. A supplier offers to make 10,000 of the assembly part at $6 per unit. If the offer is accepted, Manson will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, Manson will realize by buying the part.(Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Make	Buy	Net Income Increase (Decrease)
Variable manufacturing costs	$	$	$
Fixed manufacturing costs
Purchase price
Total annual cost	$	$	$

Should Manson make or buy the part?

The decision should be tomakebuythe part.