Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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 Amount per Relevant fixed Total relevant costs costs Unit Total incremental cost to make Calculate the total incremental cost of buying 80,000 units. (Round cost per unit answers to 2 decimal places.) Incremental Costs to Buy Relevant Relevant Total relevant Amount per fixed costs costs Unit Total incremental cost to buy Should the company continue to manufacture the part, or should it buy the part from the outside supplier? OBuy Make

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_2

Step: 3

blur-text-image_3

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

Options Futures And Other Derivatives

Authors: John Hull

9th Global Edition

1292212896, 9781292212890

More Books

Students also viewed these Accounting questions

Question

What are the main principles involved in strategic change?

Answered: 1 week ago