Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gilberto Company currently manufactures 60,000 units per year of one of its crucial parts. Variable costs are $2.60 per unit, fixed costs related to making

image text in transcribedimage text in transcribedimage text in transcribed

Gilberto Company currently manufactures 60,000 units per year of one of its crucial parts. Variable costs are $2.60 per unit, fixed costs related to making this part are $60,000 per year, and allocated fixed costs are $45,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Gilberto is considering buying the part from a supplier for a quoted price of $3.80 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 60,000 and buying 60,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier? Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 60,000 units. (Round cost per unit answer to 2 decimal places.) Incremental Costs to Make Relevant Relevant fixedTotal relevant Amount per costs Unit costs $ 2.60 $ 156,000 $ 15,000 Variable cost per unit Allocated fixed costs Total incremental cost to make $ 171,000 Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of buying 60,000 units. (Round cost per unit answer to 2 decimal places.) Incremental Costs to Buy Relevant Relevant Amount per Unit fixed costs Total relevant costs Total incremental cost to buy Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Outside Supplier Should the company continue to manufacture the part, or should it buy the part from the outside supplier? Should Gilberto make the part or purchase it from the outside supplier? Costs to Buy 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

The Book Marketing Audit

Authors: Kilby Blades

1st Edition

0985798335, 978-0985798338

More Books

Students also viewed these Accounting questions

Question

Understand employee mentoring

Answered: 1 week ago

Question

Appreciate the importance of new-employee orientation

Answered: 1 week ago