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Ivanhoe Manufacturing incurs unit costs of $8.00 ($5.00 variable and $3.00 fixed) in making a sub-assembly part for its finished product. A supplier offers
Ivanhoe Manufacturing incurs unit costs of $8.00 ($5.00 variable and $3.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 16,200 of the parts for $5.40 per unit. If it accepts the offer, Ivanhoe will save all variable costs and $1.00 of fixed costs Prepare an analysis showing the total cost savings, if any, that Ivanhoe will realize by buying the part. (Round per unit answers to 2 decimal places, es 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, ea-15,000 or parenthesis, eg (15,000)) Number of units: The decision should be to Per Unit Make Buy Net Income Increase (Decrease)
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