Relevant and irrelevant costs: 1. DeCesare Computers makes 5,200 units of a circuit board, CB76 at a cost of $280 each. Variable costper 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 incurthe 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 followinginformation: Old Machine New Machine Original cost $10,700 $9,000 Useful life 10 years 3 years Current age 7 years 0 years Remaining useful life 3 years 3 years Accumulated depreciation $7,490 Not acquired yet Book value $3,210 Not acquired yet Current disposal value (in cash ) $2,200 Not acquired yet Terminal disposal value (3 years from now) $0 $0 Annual cash operating costs $17,500 $15,500 LN Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes.Should LN Manufacturing replace the old machine? Explain.

Relevant and irrelevant costs: 1. DeCesare Computers makes 5,200 units of a circuit board, CB76 at a cost of $280 each. Variable costper unit is $190 and fixed cost per unit is $90. Peach Electronics...

Relevant and irrelevant costs:

1.
DeCesare Computers makes 5,200 units of a circuit board, CB76 at a cost of $280 each. Variable costper 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 incurthe 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 followinginformation:

	Old Machine	New Machine
Original cost	$10,700	$9,000
Useful life	10 years	3 years
Current	age 7 years	0 years
Remaining useful life	3 years	3 years
Accumulated depreciation	$7,490	Not acquired yet
Book value	$3,210	Not acquired yet
Current disposal value (in cash	) $2,200	Not acquired yet
Terminal disposal value (3 years from now)	$0	$0
Annual cash operating costs	$17,500	$15,500

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

Should LN Manufacturing replace the old machine? Explain.

Dec 30, 2021

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Relevant and irrelevant costs: 1. DeCesare Computers makes 5,200 units of a circuit board, CB76 at a cost of $280 each. Variable costper unit is $190 and fixed cost per unit is $90. Peach Electronics...

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