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Answer the following questions.

1.Dietrich Computers makes 5,100 units of a circuit board, CB76 at a cost of $210 each. Variable cost per unit is $150 and fixed cost per unit is $60. Peach Electronics offers to supply 5,100 units of CB76 for $190. If Dietrich buys from Peach it will be able to save $15 per unit in fixed costs but continue to incur the remaining $45 per unit. Should Dietrich accept Peach's offer? Explain.

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

Data table

	Old Machine	New Machine
Original cost	$10,500	$8,400
Useful life	12 years	3 years
Current age	9 years	0 years
Remaining useful life	3 years	3 years
Accumulated depreciation	$7,875	Not acquired yet
Book value	$2,625	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	$16,500	$15,500

1. Dietrich Computers makes 5,100 units of a circuit board, CB76 at a cost of $210 each. Variable cost per unit is $150 and fixed cost per unit is $60. Peach Electronics offers to supply 5,100 units of CB76 for $190. If Dietrich buys from Peach it will be able to save $15 per unit in fixed costs but continue to incur the remaining $45 per unit.

Begin by calculating the relevant cost per unit. (If an input field is not used in the table, leave the input field empty; do not enter a zero.)

	Make	Buy
Relevant costs:
Variable costs per unit	$?
Avoidable fixed costs per unit	?
Purchase price per unit		$?
Unit relevant cost	$?	$?

2. AH maufacturing is deciding whether to keep or replace an old machine. AH manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes.

Begin by calculating the total relevant costs. (If an input field is not used in the table, leave the input field empty; do not enter a zero. Use parentheses or a minus sign for numbers to be subtracted.)

	Keep	Replace	Difference
Cash operating costs	$?	$?	$?
Current disposal value of old machine		(?)	?
Cost of new machine		?	(?)
Total relevant costs	$?	$?	$?

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