Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Exercise 23-2 Make or buy LO P1 Gelb Company currently manufactures 49,500 units per year of a key component for its manufacturing process. Variable costs

image text in transcribed
image text in transcribed
Exercise 23-2 Make or buy LO P1 Gelb Company currently manufactures 49,500 units per year of a key component for its manufacturing process. Variable costs are $4.05 per unit, fixed costs related to making this component are $65.000 per year, and allocated fixed costs are $70,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.50 per unit Calculate the total incremental cost of making 49,500 units and buying 49,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Supplier Supplier Calculate the total incremental cost of making 49,500 units. (Round variable cost per unit answers to 2 imal places.) Incremental Costs to Make Relevant Amount per Unit Relevant Fixed Costs Total Relevant C osts Total incremental cost to make Costs to Buy > Exercise 23-2 Make or buy LO P1 Gelb Company currently manufactures 49,500 units per year of a key component for its manufacturing process. Variable costs are $4.05 per unit, fixed costs related to making this component are $65,000 per year, and allocated fixed costs are $70,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.50 per unit. Calculate the total incremental cost of making 49,500 units and buying 49,500 units. Should It continue to manufacture the component or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of buying 49,500 units. (Round "purchase price per unit answers to 2 decimal places.) Incremental Costs to Buy Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs Total incremental cost to buy

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

13th Edition

978-0697789938

Students also viewed these Accounting questions