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Gilberto Company currently manufactures 80,000units per year of one of its crucial parts. Variable costs are $1.80 per unit, fixed costs related to making this
Gilberto Company currently manufactures 80,000units per year of one of its crucial parts. Variable costs are $1.80 per unit, fixed costs related to making this part are $80,000 per year, and allocated fixed costs are $40,000 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 $3.00 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 80,000 units. (Round cost per unit answers to 2 decimal places.) Incremental Costs to Make Relevant Amount per Unit Relevant fixed Total relevant costs costs 1.80 144,000 80,000 ariable cost Fixed manufacturing costs Total incremental cost to make 224,000 Calculate the total incremental cost of buying 80,000 units. (Round cost per unit answers to2 decimal places.) Incremental Costs to Buy Relevant Amount per Unit Relevant fixed costs Total relevant costs Purchase price otal incremental cost to buy 0
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