Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Gelb Company currently manufactures 58,500 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related
Gelb Company currently manufactures 58,500 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related to making this component are $83,000 per year, and allocated fixed costs are $67,500 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 58,500 and buying 58,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? (Round "purchase price per unit" answer to 2 decimal places.) Complete this question by entering your answers in the tabs below Outside Supplier Costs to Make Costs to Buy Calculate the total incremental cost of making 58,500 units. (Round "variable cost per unit" answer to 2 decimal places.) Incremental Costs to Make Relevant Relevant Amount per Fixed Costs Total Relevant Costs Unit Variable cost per unit Total incremental cost to make 0 Incremental Costs to Buy Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs Purchase price per unit Total incremental cost to buy
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started