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Gelb Company currently manufactures 48,000 units per year of a key component for its manufacturing process. Variable costs are $6.25 per unit, fixed costs related
Gelb Company currently manufactures 48,000 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 $67,000 per year, and allocated fixed costs are $63,500 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 ssdlier for $3.50 per unit. Calculate the total incremental cost of making 48,000 units. (Round "variable cost per unit" answer to 2 decimal places.) Incremental Costs to Make Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs Total incremental cost to make Varto Company has 9,000 units of its sole product in inventory that it produced last year at a cost of $26 each. This year's model is superior to last year's and the 9,000 units cannot be sold at last year's regular selling price of $52 each. Varto has two alternatives for these items: (1) they can be sold to a wholesaler for $14 each, or (2) they can be processed further at a cost of $186,000 and then sold for $34 each. Prepare an analysis to determine whether Varto should sell the products as is or process them further and then sell them. INCREMENTAL REVENUE AND COST OF ADDITIONAL PROCESSING Revenue if processed further Revenue if sold as is Incremental revenue Incremental net income(Loss) The company should
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