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i started this problem and could not fonish, please correct if wrong SECTION B Problem 6 Company D manufactures wheels for its bikes. The annual
i started this problem and could not fonish, please correct if wrong
SECTION B Problem 6 Company D manufactures wheels for its bikes. The annual costs to manufacture the 150,000 wheels needed each year are as follows: Cost per unit (S/unit) Direct materials Direct labor Variable manufacturing overhead $ 1.10/unit $0.30/unit $0.40/unit Fixed manufacturing overhead Total Cost $300,000 A small supplier has offered to provide Company D with its annual wheel needs for $3.50 per wheel. If Company D accepts this offer, 75% of the fixed manufacturing overhead above could be totally eliminated Also, Company would be able to rent out the freed up space and could generate $72,000 of income annually. Assume that direct labor is a variable cost. Make Buy What is the volume (Q)? 150,000 150,000 What is the variable cost per unit? $1.8 What are the avoidable fixed costs 225.000 525,000 What is the value of the excess capacity? What is the change in profit if the company buys instead of makes? Should the company buy Step by Step Solution
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