Exercise 25-19 Make or buy decision LO A1

Gilberto Company currently manufactures 60,000 units per year of one of its crucial parts. Variable costs are $1.60 per unit, fixed costs related to making this part are $60,000 per year, and allocated fixed costs are $30,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Gilberto is considering buying the part from a supplier for a quoted price of $2.80 per unit guaranteed for a three-year period. Calculate the total incremental cost of making and buying 60,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier? Complete the question by entering your answers in the tables below.

Inc Costs to Inc Costs to Buy Make Calculate the total incremental cost of making 60,000 units. (Round cost per unit answer to 2 decimal places.) Incremental Costs to Make Relevant Relevant Fixed Total Relevant Amount per Unit Costs Costs Total incremental cost to make Inc Costs toInc Costs to Make Buy Calculate the total incremental cost of buying 60,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier? (Round cost per unit answer to 2 decimal places.) Incremental Costs to Buy Relevant Amount Relevant Fixed Total Relevant Costs per Unit Costs 0 Total incremental cost to buy The component should manufacture or buy from the outside supplier