Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Gilberto Company currently manufactures one of its crucial parts at a cost of $4.45 per unit. This cost is based on a normal production rate
Gilberto Company currently manufactures one of its crucial parts at a cost of $4.45 per unit. This cost is based on a normal production rate of 65,000 units per year. Variable costs are $1.95 per unit, fixed costs related to making this part are $65,000 per year, and allocated fixed costs are $58,500 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 $3.50 per unit guaranteed for a three-year period. |
Calculate the total incremental cost of making 65,000 units. |
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started