Rice Electronics Corporation currently manufactures a sub-assembly for its main product. The costs per unit are as follows:

Direct materials	$	6.00
Direct labour		30.00
Variable overhead		15.00
Fixed overhead		27.70
Total	$	78.70

White Tiger Corp. has contacted Rice Electronics with an offer to sell it 6,000 sub-assemblies for $57.00 each.

PART A

Should Rice Electronics make or buy the sub-assemblies? Create a schedule that shows the total quantitative differences between the two alternatives.(Round all entries to 2 decimal places, e.g. 1.25.)

Cost to make per unit	$
Cost to buy per unit	$

Rice Electronics should

the sub-assemblies.

PART B

The accountant decides to investigate the fixed costs to see whether any incremental changes will occur if the sub-assembly is no longer manufactured. The accountant believes that Rice Electronics will eliminate $75,000 of fixed overhead if it accepts the proposal. Does this new information change the decision?(Round all entries to 2 decimal places, e.g. 1.25.)

Cost to make per unit	$
Cost to buy per unit	$

Rice Electronics should

the subassemblies