1. Davanit Computers makes 5,200 units of a circuit board, CB76 at a cost of $220...

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1. Davanit Computers makes 5,200 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $150 and fixed cost per unit is $70. Peach Electronics offers to supply 5,200 units of CB76 for $200. If Davanit buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the remaining $50 per unit. Should Davanit accept Peach's offer? Explain. 2. LF Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: (Click the icon to view the information.) LF Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should LF Manufacturing replace the old machine? Explain. 1. Davanit Computers makes 5,200 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $150 and fixed cost per unit is $70. Peach Electronics offers to supply 5,200 units of CB76 for $200. If Davanit buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the remaining $50 per unit. Should Davanit accept Peach's offer? Explain. Davanit Computers should Peach's offer. When comparing relevant costs between the choices, Peach's offer price is than the cost to continue to produce. Data Table Old Machine $ 10,600 $ New Machine 9,600 8 years 3 years 5 years 0 years 3 years 3 years $ 6,625 Not acquired yet $ 3,975 Not acquired yet $ 2,900 Not acquired yet 0 $ 0 $ 17,500 $ 14,000 Original cost Useful life Current age Remaining useful life Accumulated depreciation Book value Current disposal value (in cash) Terminal disposal value (3 years from now) $ Annual cash operating costs 1. Davanit Computers makes 5,200 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $150 and fixed cost per unit is $70. Peach Electronics offers to supply 5,200 units of CB76 for $200. If Davanit buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the remaining $50 per unit. Should Davanit accept Peach's offer? Explain. 2. LF Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: (Click the icon to view the information.) LF Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should LF Manufacturing replace the old machine? Explain. 1. Davanit Computers makes 5,200 units of a circuit board, CB76 at a cost of $220 each. Variable cost per unit is $150 and fixed cost per unit is $70. Peach Electronics offers to supply 5,200 units of CB76 for $200. If Davanit buys from Peach it will be able to save $20 per unit in fixed costs but continue to incur the remaining $50 per unit. Should Davanit accept Peach's offer? Explain. Davanit Computers should Peach's offer. When comparing relevant costs between the choices, Peach's offer price is than the cost to continue to produce. Data Table Old Machine $ 10,600 $ New Machine 9,600 8 years 3 years 5 years 0 years 3 years 3 years $ 6,625 Not acquired yet $ 3,975 Not acquired yet $ 2,900 Not acquired yet 0 $ 0 $ 17,500 $ 14,000 Original cost Useful life Current age Remaining useful life Accumulated depreciation Book value Current disposal value (in cash) Terminal disposal value (3 years from now) $ Annual cash operating costs