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Gilberto Company currently manufactures 70,000 units per year of one of its crucial parts. Variable costs are $3.20 per unit, fixed costs related to making
Gilberto Company currently manufactures 70,000 units per year of one of its crucial parts. Variable costs are $3.20 per unit, fixed costs related to making this part are $70,000 per year, and allocated fixed costs are $35,000 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 $3.40 per unit guaranteed for a three-year period Calculate the total incremental cost of making and buying 70,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier? Inc Costs to Inc Costs to Make Buy Calculate the total incremental cost of making 70,000 units. (Round cost per unit answer to 2 decimal places.) Incremental Costs to Make Relevant Amount Relevant FixedTotal Relevant Costs Costs per Unit 0 Total incremental cost to make inc costs to Make Inc Costs to Buy Calculate the total incremental cost of buying 70,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier? (Round cost per unit answer to 2 decimal places.) Incremental Costs to Buy Relevant Amount Relevant Fixed Total Relevant Costs per Unit Costs 0 Total incremental cost to buy The component should manufacture or buy from the outside supplier
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