Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gilberto Company currently manufactures 75,000 units per year of one of its crucial parts. Variable costs are $2.45 per unit, fixed costs related to making

image text in transcribed

image text in transcribed

image text in transcribed

Gilberto Company currently manufactures 75,000 units per year of one of its crucial parts. Variable costs are $2.45 per unit, fixed costs related to making this part are $85,000 per year, and allocated fixed costs are $72,000 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 $3.65 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 75,000 and buying 75,000 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. bes Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 75,000 units. (Round cost per unit answers to 2 decimal places.) Total Relevant Costs Incremental Costs to Make Relevant Amount per Relevant Fixed Unit Costs 75,000 75,000 Fixed manufacturing costs Variable cost per unit Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 75,000 units. (Round cost per unit answers to 2 decimal places.) Incremental Costs to Make to Make Relevant Amount Relevant Total Relevant per Unit Costs Costs Fixed manufacturing costs 75,000 Variable cost per unit 75,000 Amount Fixed Costs Total incremental cost to make Costs to Buy > Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of buying 75,000 units. (Round cost per unit answers to 2 decimal Incremental Costs to Buy Relevant Amount Relevant Fixed per Unit Costs 273,750.00 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

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions