CB76 at a cost of $220 each. Variable cost If Douglas buys from Peach it will be able t ffer? Explain.
CB76 at a cost of $220 each. Variable cost If Douglas buys from Peach it will be able t ffer? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Answer the following questions.
1. Douglas Computers makes 5,900 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $170 and fixed cost per unit is $50. Peach
Electronics offers to supply 5,900 units of CB76 for $200. If Douglas buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the
remaining $30 per unit. Should Douglas accept Peach's offer? Explain.
1. Douglas Computers makes 5,900 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $170 and fixed cost per unit is $50. Peach
Electronics offers to supply 5,900 units of CB76 for $200. If Douglas buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the
remaining $30 per unit. Should Douglas accept Peach's offer? Explain.
Begin by calculating the relevant cost per unit. (If a box is not used in the table, leave the box empty; do not enter a zero.)
Make
Buy
Relevant costs:
Unit relevant cost
Douglas Computers should
Peach's offer. When comparing relevant costs between the choices, Peach's offer price is
than the cost to continue to
produce.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe14fc7e-c7f7-4f40-88d7-9aaf69dc35a7%2F9712c548-395f-48de-aeff-51380ae06748%2Fn2zbpld_processed.png&w=3840&q=75)
Transcribed Image Text:Answer the following questions.
1. Douglas Computers makes 5,900 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $170 and fixed cost per unit is $50. Peach
Electronics offers to supply 5,900 units of CB76 for $200. If Douglas buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the
remaining $30 per unit. Should Douglas accept Peach's offer? Explain.
1. Douglas Computers makes 5,900 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $170 and fixed cost per unit is $50. Peach
Electronics offers to supply 5,900 units of CB76 for $200. If Douglas buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the
remaining $30 per unit. Should Douglas accept Peach's offer? Explain.
Begin by calculating the relevant cost per unit. (If a box is not used in the table, leave the box empty; do not enter a zero.)
Make
Buy
Relevant costs:
Unit relevant cost
Douglas Computers should
Peach's offer. When comparing relevant costs between the choices, Peach's offer price is
than the cost to continue to
produce.
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