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In: Accounting

DowlingComputers makes 5,000units of a circuit​ board,CB76 at a cost of $280 each. Variable cost per...

DowlingComputers makes 5,000units of a circuit​ board,CB76 at a cost of $280

each. Variable cost per unit is $220and fixed cost per unit is $60.Peach Electronics offers to supply 5,000units of CB76 for

$260.IfDowlingbuys from Peach it will be able to save $10per unit in fixed costs but continue to incur the remaining $50per unit. Should Dowling

accept​ Peach'soffer? Explain

1. DowlingComputers makes5,000units of a circuit​ board,CB76 at a cost of $280

each. Variable cost per unit is $220and fixed cost per unit is $60.Peach Electronics offers to supply5,000units of CB76 for $260.If Dowlingbuys from Peach it will be able to save $10per unit in fixed costs but continue to incur the remaining $50per unit. Should Dowlingaccept​ Peach'soffer? Explain.

Begin by calculating the relevant cost per unit. ​(Ifa box is not used in the​ table,leave the box​ empty;do not enter a​ zero.)

Make

Buy

Relevant costs:

Unit relevant cost

DowlingComputers should accept/rejectPeach'soffer. When comparing relevant costs between thechoices,Peach's offer price is higher/lowerthan the cost to continue to produce.


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Expert Solution

ekkarill92 answered 1 year ago
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