BE3 At Bargain Electronics, it costs $30 per unit ($20 variable and $10 xed) to...
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BE3 At Bargain Electronics, it costs $30 per unit ($20 variable and $10 xed) to make an MP3 player that normally sells for $45. A foreign wholesaler offers to buy 3,000 units at $25 each. Bargain Electronics will incur special shipping costs of $3 per unit. Assuming that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order.
BE4 Manson Industries incurs unit costs of $8 ($5 variable and $3 xed) in making an assembly part for its nished product. A supplier offers to make 10,000 of the assembly part at $6 per unit. If the offer is accepted, Manson will save all variable costs but no xed costs. Prepare an analysis showing the total cost saving, if any, Manson will realize by buying the part.
BE7 Bryant Company has a factory machine with a book value of $90,000 and a remain-ing useful life of 5 years. It can be sold for $30,000. A new machine is available at a cost of $400,000. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $600,000 to $500,000. Prepare an analysis showing whether the old machine should be retained or replaced.
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