Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gelb Company currently manufactures 40,000 units per year of a key component for its manufacturing process. Variable costs are $6.25 per unit, fixed costs related

image text in transcribed

Gelb Company currently manufactures 40,000 units per year of a key component for its manufacturing process. Variable costs are $6.25 per unit, fixed costs related to making this component are $77,000 per year, and allocated fixed costs are $65,500 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 and buying 40,000 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. Inc Costs to Make Inc Costs to Buy Calculate the total incremental cost of buying 40,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? (Round cost per unit answer to 2 decimal places.) Incremental Costs to Buy Relevant Amount Relevant Fixed per Unit Costs Total Relevant Total incremental cost to buy The component should manufacture or buy from the outside supplier

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Dare To Be Different An Auditors Personal Guide To Excellence

Authors: Daniel Clark

1st Edition

1490772405, 978-1490772400

More Books

Students also viewed these Accounting questions