R. C. Barker makes purchasing decisions for his company. One product that he buys costs $50 per unit when the order quantity is

$4,800 Explanation: The calculation for the increased annual cash inflow is detailed below: Savings from the new machine's annual maintenance costs = $15,000 - $6,000 = $9,000 Net maintenance savings = $9,000 × (1 - 0.4) = $5,400 Reduction in depreciation due to acquiring new equipment = ($60,000 ÷ 10) - ($45,000 - 10) = $6,000 - $4,500 = $1,500 Tax implications from decreased depreciation = $1,500 × 0.4 = $600 Net annual cash inflow associated with new machinery = Net maintenance savings - Tax impact = $5,400 - $600 = $4,800. Hence, this process yielded the computed additional annual cash inflow.

It indicates a financial advantage of $18,800 for accepting the offer. Kleffman Corporation currently produces part X31 with an annual output of 2,000 units. According to their accounting data, the production costs at this level are as follows: DM $6.90, DL $4.90, V MO $8.00, Supervisor $2.20, Depreciation $1.40, General $2.80, totaling $26.20 per unit. The unavoidable cost amounts to $2.80 x 2,000 units = $5,600. The depreciation is treated as a sunk cost, reflecting no cash flow impact on the business. Making the part internally results in a total expenditure of $52,400. The potential opportunity cost associated with generating an additional segment margin of $18,800 comes into play. The total cost aligns at $71,200 against the purchase cost of $23.40 x 2,000 = $46,800. The unavoidable cost remains at $5,600, resulting in a total of $52,400 when taken into account. Thus, the differential is computed as 71,200 - 52,400 = 18,800.