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 $1.95 per unit, fixed costs related

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Gelb Company currently manufactures 40,000 units per year of a key component for its manufacturing process. Variable costs are $1.95 per unit, fixed costs related to making this component are $65,000 per year, and allocated fixed costs are $58,500 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 40,000 units 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. Outside Costs to Make Costs to Buy Supplier Calculate the total incremental cost of making 40,000 units. (Round "variable cost per unit" answer to 2 decimal places.) Complete this question by entering your answers in the tabs below. Outside Costs to Make Costs to Buy Supplier Calculate the total incremental cost of making 40,000 units. (Round "variable cost per unit" answer to Incremental Costs to Make Relevant Amount per Unit Total Relevant Costs Relevant Fixed Costs Total incremental cost to make Costs to Make Costs to Buy Outside Costs to Make Costs to Buy Supplier Calculate the total incremental cost of buying 40,000 units. (Round "purchase price per unit" answer to Incremental Costs to Buy Relevant Amount per Unit Total Relevant Costs Relevant Fixed Costs Total incremental cost to buy Costs to Make Complete this question by entering your answers in the tabs below. Outside Costs to Make Costs to Buy Supplier Should it continue to manufacture the component, or should it buy this component 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

Cost And Management Accounting

Authors: Duncan Williamson

1st Edition

0132059231, 978-0132059237

More Books

Students also viewed these Accounting questions

Question

Who do you consider family?

Answered: 1 week ago

Question

analyze how research and writing unites with design.

Answered: 1 week ago