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HOW DO I CALCULATE? Gilberto Company currently manufactures 66,000 units per year of one of its crucial parts. Variable costs are $2.00 per unit, fixed
HOW DO I CALCULATE?
Gilberto Company currently manufactures 66,000 units per year of one of its crucial parts. Variable costs are $2.00 per unit, fixed costs related to making this part are $76,000 per year, and allocated fixed costs are $63,000 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 $3.30 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 66,000 and buying 66,000 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. Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 66,000 units. (Round cost per unit answers to 2 decimal places.) Incremental Costs to Make Total Relevant Costs Unit Relevant Amount per Relevant Fixed Costs $ 2.00 66,000 Variable cost per unit Fixed manufacturing costs 76,000 Total incremental cost to make $ 76,000 Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of buying 66,000 units. (Round cost per unit answers to 2 decimal places.) Incremental Costs to Buy Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs Purchase price per unit Total incremental cost to buyStep by Step Solution
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