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Gelb Company currently manufactures 57,000 units per year of a key component for its manufacturing process. V------- * * 05 per unit, fixed costs related
Gelb Company currently manufactures 57,000 units per year of a key component for its manufacturing process. V------- * * 05 per unit, fixed costs related to making this component are $73,000 per year, and allocated fi Costs to Buy O 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 $3.90 per unit. Calculate the total incremental cost of making 57,000 units and buying 57,000 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. Costs to Costs to Outside Make Buy Supplier Calculate the total incremental cost of making 57,000 units. (Round "variable cost per unit" answers to 2 decimal places.) Incremental Costs to Make Relevant Relevant Amount Fixed per Unit Costs Variable cost per unit $ 4.05 Fixed manufacturing costs $ 73,000 Total Relevant Costs $ 230,850 73,000 Total incremental cost to make $ 303,850 (Costs to Make Costs to Buy > Costs to Costs to Outside Make Buy Supplier Calculate the total incremental cost of buying 57,000 units. (Round "purchase price per unit" answers to 2 decimal places.) Incremental Costs to Buy Relevant Relevant Amount Fixed per Unit Costs Total Relevant Costs Total incremental cost to buy Costs to Costs to Outside Make Buy Supplier Should it continue to manufacture the component, or should it buy this component from the outside supplier? Should Gelb make the part or purchase it from the outside supplier?
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