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Unformatted text preview: 13-31. No they should keep producing in house because it costs them $5 less per unit $14/unit + $10/unit+ $3/unit + $2/unit = $30/unit < $35/unit as offered by outside supplier.Cost to make = 15,000 units * $30/unit = $450,000Cost to buy = 15,000 units * $35/unit = $525,000$75,000 savings2.MakeBuyTotal annual cost$450,000$525,000Opportunity cost foregone on new product line $125,000$0Total cost$575,000$525,000Difference in favor of purchasing from supplier$25,00013-4Yes they should accept it because it would cause an incremental noi of $449.00Per unitTotalIncremental revenue$169.95$3,399.00Less incremental costs:Variable costs:Direct materials$84.00$1,680.00Direct labor$45.00$900.00Variable manufacturing O.H.$4.00$80.00Special modifications$2.00$40.00Total variable costs$135.00$2,700.00Fixed cost:Special tool$250.00Total incremental cost$2950.00Incremental net operating income$449.0013-5ABCUnit dm cost/ $8 dm cost per pound$24/$8 =$72/$8$32/$8Pounds of DM/unit3 pounds per unit9 pounds per unit...
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- Spring '11