15. Kando Company incurs a $9 00 per unit cost for Product A, which it currently

Question

15. Kando Company incurs a $9 00 per unit cost for Product A, which it currently manufactures and sells for $13 50 per unit $6 00 per unit and sell it for $10 30 per unit. If it does so, unit sales would remain the $0 00 per unit costs assigned to Product A would be eliminated the company can purchase Product B for 1. Prepare Incromental cost analysis. Should the company continue to manufacture Product A or purchase Product B for resale? (Round your answers to 2 decimal places.) 10.3 Avoidable costs Unavoidable costs Cost to purchase 90 Total costs 9.00 4 50 The company should Type here to search O0 ProDisplay P202 19 rs 6 0

Explanation / Answer

Manufacture product A:

Sales 13.5

Unavoidable cost 9

Total costs 9

Net profit 13.5-9 = 4.5

Purchase product B:

Sales 10.3

Avoidable costs 6

Non avoidable costs 3

Purchase cost 6

Total cost 9

Net profit 10.3-9 = 1.3

So, the company should purchase product A because of high net profit.

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