Wheeler Company can produce a product that incurs the following costs per unit: direct materials, $9.90; direct labor, $23.90, and overhead, $15.90. An outside supplier has offered to sell the product to Wheeler for $45.44. If Wheeler buys from the supplier, it will still incur 40% of its overhead cost. Compute the net incremental cost or savings of buying.

$2.1 per unit

Explanation:

The total cost per unit would be

= Direct materials per unit + direct labor per unit + overhead cost per unit

= 9.90+23.90+15.90

= $49.7

Purchase price + overhead cost

=45.44 + 15.90 x 40%

= $51.8

The difference would be

= $51.8 - $49.7

= $2.1

The difference between both values is the net incremental cost or savings of buying.

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a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.