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Carla Vista water co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer units used in each of its systems. Based on an annual production of 49, 500 timers, the company has calculated the following unit costs. Direct fixed cost include supervisory and clerical salaries and equipment depreciation.

Direct material $11

Direct Labor $7

Variable manufacturing overhead $3

Direct fixed manufacturing overhead $8 (30% salaries,70% depreciated)

Allocated fixed manufacturing overhead $6

Total unit cost $35

Clifton Clocks has offered to provide the timer units to Carla Vista at a price of $33 per unit. If Carla Vista accepts the offer, the current timer unit supervisory and clerical staff will be laid off.

(A1)

Calculate the total relevant cost to make or buy the timer units

answer: To make $1,158,300 to buy $ 1,633,500

(B1) - looking for an answer for the below question

Assume that if Carla Vista water accepts Clifton's offer, the company can use the freed up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sel 83,890 of the lights each year at a price of $10 Variable costs of the lights are expected to be $7 per unit. The timer unit supervisory and clerical staff would be transferred to this new product line. Calculate the total relevant cost to make the timer units and the next cost if they accept Clifton's offer

Total relevant cost to Make $

and

Net relevant cost if they accept Clifton's offer $

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