Answer the following questions:
Douglas Computers makes 900 units of circuit board, CB76, at a cost of $220 each. The variable cost per unit is $170, and the fixed cost per unit is $50. Peach Electronics offers to supply 900 units of CB76 for $200. If Douglas 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 Douglas accept Peach's offer? Explain.
Douglas Computers makes 900 units of circuit board, CB76, at a cost of $220 each. The variable cost per unit is $170, and the fixed cost per unit is $50. Peach Electronics offers to supply 500 units of CB76 for $200. If Douglas 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 Douglas accept Peach's offer? Explain.
Begin by calculating the relevant cost per unit: (If a box is not used in the table, leave the box empty; do not enter zero:)
Make
Buy
Relevant costs:
Unit relevant cost
Douglas Computers should produce_
Peach's offer. When comparing relevant costs between the choices, Peach's offer price is
than the cost to continue to