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The Celltech Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards ( CB - 0 2 5 ) , an important part

The Celltech Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CB-025), an important part of the cellular modem. It reports the following cost information about the costs of making CB-025s in 2023 and the expected costs in 2024:
Current Costs in 2023 Expected Costs in 2024
Variable manufacturing costs:
Direct material cost per CB-025 $180 $170
Direct manufacturing labor cost per CB-0255045
Variable manufacturing cost per batch for setups, materials handling, and quality control 16001500
Fixed manufacturing cost:
Fixed manufacturing overhead costs that can be avoided if CB-025s are not made 320,000320,000
Fixed manufacturing overhead costs of plant depreciation, insurance, and administration that cannot be avoided even if CB-025s are not made 800,000800,000
Celltech manufactured 8,000 CB-025s in 2023 in 40 batches of 200 each. In 2024, Celltech anticipates needing 10,000 CB-025s. The CB-025s would be produced in 80 batches of 125 each. The Alpha Corporation has approached Celltech about supplying CB-025s to Celltech in 2024 at $300 per CB-025 on whatever delivery schedule Celltech wants.
1. Calculate the total expected manufacturing cost of making CB-025s in 2024 and manufacturing cost per unit of CB-025 in 2024. quired
2. Suppose the capacity currently used to make CB-025s will become idle if Celltech purchases CB-025s from Alpha.
a. On the basis of financial considerations alone, should Celltech make CB-025s or buy them from Alpha? Show your calculations.
b. What is the maximum price per CB-025 Celltech would be willing to pay Alpha under these circumstances?
3. Now suppose that if Celltech purchases CB-025s from Alpha, its best alternative use of the capacity currently used for CB-025s is to make and sell a different kind of circuit boards (CB123) to the Winton Corporation. Celltech estimates the following incremental revenues and costs from CB-123s:
Total expected incremental future revenues $2,000,000
Total expected incremental future costs $2,150,000
On the basis of financial considerations alone, should Celltech make CB-025s or buy them from Alpha? Show your calculations.

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