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Lakeshore Inc. is currently operating at 90% of capacity and is currently purchasing peppermint candies...

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Accounting

  1. Lakeshore Inc. is currently operating at 90% of capacity and is currently purchasing peppermint candies for $68 per unit. The unit cost for Lakeshore Inc. to make its own peppermint candies is $70, which includes $5 of fixed costs.

If 50,000 units of the peppermint candies are normally purchased each year but could be manufactured using unused capacity.

What would be the amount of differential cost increase or decrease for making the peppermint candies rather than purchasing them? (Show your work!)

Should I continue to purchase the candies? Yes or No

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