General Accounting Neptune Electronics incurs unit costs of $12 ($8 variable and $4 fixed) inmanufacturing a circuit board component for its main product. A supplier hasoffered to produce 25,000 of these components at $9.50 per unit. If the offer isaccepted, Neptune will avoid all variable costs but retain all fixed costs.Calculate the total cost impact (saving or increase) if Neptune accepts thesupplier's offer.A. $37,500 cost increaseB. $62,500 cost savingC. $37,500 cost savingD. $62,500 cost increase

Step 1: Define Make-or-Buy DecisionA make-or-buy decision analyzes whether a company should continue…

Answered: Neptune Electronics incurs unit costs…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 5P

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Vaughn Manufacturing has the following costs when producing 100000 units: Variable costs $600000 Fixed costs 900000 An outside supplier has offered to make the item at $4.50 a unit. If the decision is made to purchase the item outside, current production facilities could be leased to another company for $167000. The net increase (decrease) in the net income of accepting the supplier's offer is O $317000. O $(17000). O $832000. O $283000.
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The xyz company has offered to supply 10000 solve financial accounting question
DeCesare Computers makes 5000 units of a circuit board, CB76 at a cost of $280 each. Variable cost per unit is $170 and fixed cost per unit is $110. Peach Electronics offers to supply 5000 units of CB76 for $260. If buys from Peach it will be able to save $15 per unit in fixed costs but continue to incur the remaining $95 per unit. Should DeCesare accept Peach's offer? Explain. TX Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: Old Machine New Machine Original cost $10,400 $9,200 Useful life 13 years 3 years Current age 10 years 0 years Remaining useful life 3 years 3 years Accumulated depreciation $8,000 Not acquired yet Book value $2,400 Not acquired yet Current disposal value (in cash) $2,000 Not acquired yet Terminal disposal value (3 years from now) $0…
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