Should ln manufacturing replace the old machine

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Reference no: EM131210704

Relevant and irrelevant costs.

Answer the following questions.

1. DeCesare Computers makes 5,200 units of a circuit board, CB76 at a cost of $280 each. Variable cost per unit is $190 and fixed cost per unit is $90. Peach Electronics offers to supply 5,200 units of CB76 for $260.

If DeCesare buys from Peach it will be able to save $10 per unit in fixed costs but continue to incur the remaining $80 per unit. Should DeCesare accept Peach's offer? Explain.

2. LN Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information:

798_LN Manufacturing Information.png

LN Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes.

Should LN Manufacturing replace the old machine?Explain.

Reference no: EM131210704

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