Answer the following questions.1. Dalton Computers makes 5,500 units of a circuit board, CB76 at a cost of $250 each. Variable cost per unit is $170 and fixed cost per unit is $80. Peach Electronics offers to supply 5,500 units of CB76 for$230. If Dalton buys from Peach it will be able to save $15 per unit in fixed costs but continue to incur the remaining $65 per unit. Should Dalton accept Peach's offer? Explain.2. TX Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information:(Click the icon to view the information.)TX Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should TX Manufacturing replace the old machine? Explain.Relevant COSIS.Variable costs per unitAvoidable fixed costs per unitPurchase price per unitUnit relevant costCash operating costsCurrent disposal value of old machineCost of new machine$Total relevant costs17015$185 $230230Dalton Computers should reject Peach's offer. When comparing relevant costs between the choices, Peach's offer price is higher than the cost to continue to produce.2. TX Manufacturing is deciding whether to keep or replace an old machine. TX Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should TX Manufacturingreplace the old machine? Explain.Begin by calculating the total relevant costs. (If an input field is not used in the table, leave the input field empty; do not enter a zero. Use parentheses or a minus sign for numbers to be subtracted.)DifferenceKeepReplaceC---

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Radar Company sells bikes for $520 each. The company currently sells 4,300 bikes per year and could make as many as 4,620 bikes per year. The bikes cost $265 each to make: $170 in variable costs per bike and $95 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 320 bikes for $500 each. Incremental fixed costs to make this order are $70 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Per Unit Total Contribution margin Income (b) The company should
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