Gelb Company currently manufactures 55,500 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 $79,000 per year, and allocated fixed costs are $69,500 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 $3.70 per unit.

Calculate the total incremental cost of making 55,500 units and buying 55,500 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.

Calculate the total incrementalcost of buying 55,500 units.(Round "purchase price per unit"answers to 2 decimal places.)

Tab #1: Costs to make:

Incremental Costs to Make

Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs

Variable cost per unit

Total incremental cost to make

Fixed manufacturing costs

Tab #2: Costs to Buy:

Incremental Costs to Buy

Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs

Purchase price per unit

Total incremental cost to buy

Tab #3 : Outside Supplier

Should it continue to manufacture the component, or should it buy this component from the outside supplier?