Relevant and irrelevant costs. Answer the following questions.
1. Dalton computers makes 5,000 units of a circuit board, CB76 at a cost of $230 each. Variable cost pa’ unit is $180 and fixed cost per unit is $50. Peach Electronics offers to supply 5,000 units of CB76 for $210 If Dalton buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the remaining $30 per unit. Should Dalton accept Peach’s offer? Explain.
2. AP Manufacturing is deciding whether to keep or replace an old machine. It obtains the following; information:
AP Manufacturing uses straight line depreciation. Ignore the time value of money and income taxes. Should AP Manufacturing replace the old machine?Explain.