BE21-3 At Bargain Electronics, it costs $30 per unit ($20 variable and $10 fixed

Question

BE21-3 At Bargain Electronics, it costs $30 per unit ($20 variable and $10 fixed) to make Determine whether to accept an MP3 player that normally sells for $45. A foreign wholesaler offers to buy 3,000 units at a special order $25 each. Bargain Electronics will incur special shipping costs of $3 per unit. Assuming (Lo 2) that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order. BE21-4 Manson Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making an Determine whether to make assembly part for its finished product. A supplier offers to make 10,000 of the assembly or buy a part part at $6 per unit. If the offer is accepted, Manson will save all variable costs but no fixed (LO3) costs. Prepare an analysis showing the total cost saving, if any, Manson will realize by buying the part.

Explanation / Answer

Its good to make as its cost per unit is less

be 21-3 As bargain electronics have excess capacity 3000 units Per unit Amount Sales revenue 25 75000 Variable cost -20 -60000 Additional cost -3 -9000 Net revenue 2 6000 be 21-4 Make Buy Difference Supplier price 6 -6 Variable cost 5 5 Fixed cost 3 3 0 Total cost 8 9 -1 So cost saving per unit -1 Number of units 10000 Total cost savinsg -10000

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