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the following questions. 1. DeCesare Computers makes 5,900 units of a circuit board, CB76 at a cost of $260 each. Variable cost per unit is
the following questions. 1. DeCesare Computers makes 5,900 units of a circuit board, CB76 at a cost of $260 each. Variable cost per unit is $220 and fixed cost per unit is $40. Peach Electronics offers to supply 5,900 units of CB76 for $240. If DeCesare buys from Peach it will be able to save $10 per unit in fixed costs but continue to incur the remaining $30 per unit. Should DeCesare accept Peach's offer? Explain. 2. AP Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: (Click the icon to view the information.) AP Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should AP Manufacturing replace the old machine? Explain. 1. DeCesare Computers makes 5,900 units of a circuit board, CB76 at a cost of $260 each. Variable cost per unit is $220 and fixed cost per unit is $40. Peach Electronics offers to supply 5,900 units of CB76 for $240. If DeCesare buys from Peach it will be able to save $10 per unit in fixed costs but continue to incur the remaining $30 per unit. Should DeCesare accept Peach's offer? Explain. Begin by calculating the relevant cost per unit. (If an input field is not used in the table, leave the input field empty; do not enter a zero.) Relevant costs: Unit relevant cost Make Buy Data table I Old Machine Original cost Useful life Current age Remaining useful life Accumulated depreciation $ 10,300 $ 10 years New Machine 8,000 4 years 6 years 0 years 4 years 4 years $ 6,180 Not acquired yet Book value $ 4,120 Not acquired yet Current disposal value (in cash) $ 2,900 Not acquired yet Terminal disposal value (4 years from now) $ 0 $ 0 Annual cash operating costs $ 20,000 $ 14,000
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