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Zephyr Corporation currently maintains its own printing department

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Zephyr Corporation currently maintains its own printing department. The annual costs of running this department are as follows: Variable costs Fixed costs Total $35,000 61,000 $96,000 Somatic Copy Service has offered to provide Zephyr with all of its printing needs at a total annual cost of $68,000. If Zephyr went with this offer, they would close down their printing department. Except for 30% of the fixed costs, all of the annual printing department costs above can be avoided if it was closed down. Based on this information, would Zephyr be better off to keep its printing department or to shut it down and take Somatic's offer and by how much? $6,200 better off to go with Somatic $9,700 better off to go with Somatic $6,200 better off to keep the department 89,700 better off to keep the department
Decker Inc. manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as D55. Data concerning this product are given below: Per Unit $180 Selling price Direct materials $28 Direct labor $14 $11 Variable manufacturing overhead Fixed manufacturing overhead $17 $2 Variable selling expense Fixed selling and administrative expense $18 The above per unit data are based on annual production of 8,000 units of the component. Direct labor is a variable cost. The company has received a special, one-time-only order for 500 units of component D55. There would be no variable selling expense on this special order and the total fixed manufacturing overhead and fixed selling and administrative expenses of the company would not be affected by the order. Assuming that Decker has excess capacity and can fill the order without cutting back on the production of any product, what is the minimum price per unit below which the company should not accept the special order? $67 $53 $70 $82