The Summer Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards(CMCB), an important part of the cellular modem. The company reports the following cost information about the costs of making CMCBs in2012and the expected costs in2013:

Current Costs

Expected Costs

in 2012

in 2013

Variable manufacturing costs

Direct material cost per CMCB

$185

$165

Direct manufacturing labor cost per CMCB

60

44

Variable manufacturing cost per batch for setups,

materials handling, and quality control

1,750

1,700

Fixed manufacturing cost

Fixed manufacturing overhead costs that can be

avoided if CMCBs are not made

553,580

595,000

Fixed manufacturing overhead costs of plant

depreciation, insurance, and administration that

cannot be avoided even if CMCBs are not made

966,420

1,020,000

manufactured

15 comma 20015,200

CMCBs in

20122012

in

8080

batches of

190190

each. In

20132013,

SummerSummer

anticipates needing

17 comma 00017,000

CMCBs. The CMCBs would be produced in

100100

batches of

170170

each. The

MansonManson

Corporation has approached

SummerSummer

about supplying CMCBs to

SummerSummer

in

20132013

at

$ 280$280

per CMCB on whatever delivery schedule Summer wants.

	Calculate the total expected manufacturing cost per unit of making CMCBs in 2013.
2.	Suppose the capacity currently used to make CMCBs will become idle if Summer purchases CMCBs from Manson.On the basis of financial considerationsalone, shouldSummer make CMCBs or buy them from Manson?Show your calculations.
3.	Now suppose that if Summer purchases CMCBs from Manson its best alternative use of the capacity currently used for CMCBs is to make and sell special circuit boards (CB3s) to the Essex Corporation Summer estimates the following incremental revenues and costs fromCB3s:
		Total expected incremental future revenues Total expected incremental future costs	$2,200,000 $ 2,425,000
	On the basis of financial considerations alone, should Summer make CMCBs or buy them fromManson?Show your calculations.

Summer

Summer

wants