Management is considering producing a part it needs ( 2) or using a part produced by Alec Enterprises Gabriela Co has the following manufacturing costs for 150,000 units of Part 2 DM $28,000 DL 18,500 Mixed Overhead 29,000 (FC $9,000 VC $20,000) VOH 15,000 FOH 30,000 Total $120,500 Mixed OH consists of material handling and setup costs Gabriela Co produces the 150,000 units in 100 batches of 1,500 units each Total material handling and setup costs equal fixed clerical costs of $9,000 (to support material handling and setup) plus variable setup costs of $200 per batch ($200 x 100 batches $20,000) Total Mixed Overhead $9,000 $20,000 $29,000 What is the current cost per unit for Part 2 Show your computation (Worth 1 pt ) Gabriela Co anticipates that next year the 150,000 units of Part 2 expected to be sold will be manufactured in 150 batches of 1,000 units each Mixed Overhead Variable setup costs per batch are expected to decrease to $100 There is no effect on the fixed clerical costs to support material handling and setup costs in the Mixed Overhead Gabriela Co plan to continue to produce 150,000 next year at the same variable manufacturing costs per unit as this year Fixed costs are expected to remain the same as this year Alec Enterprises offers to sell the same part to Gabriela Co for $0 55 Should Gabriela Co continue to manufacture the part or buy it from Alex Enterprises Show all your computations (Worth 3 5 pts ) Now assume that the $9,000 in fixed clerical salaries to support material handling and setup will not be incurred if Part 2 is purchased from Alec Enterprises Should Gabriela Co buy the part or continue to make the part Show your computations (Worth 3 pts ) Now assume that if Gabriela Co buys the part from Alec Enterprises, it can use the facilities previously used to manufacture Part 2 to produce Part 3 for Krystas Company The expected future operating income is $18,000 (Worth 3 pts )

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Management is considering producing a part it needs (#2) or using a part produced by Alec Enterprises. Gabriela & Co. has the following manufacturing costs

Management is considering producing a part it needs (#2) or using a part produced by Alec Enterprises.

Gabriela & Co. has the following manufacturing costs for 150,000 units of Part #2:

DM $28,000

DL 18,500

Mixed Overhead 29,000 (FC $9,000 + VC $20,000)*

VOH 15,000

FOH 30,000

Total $120,500

Mixed OH consists of material handling and setup costs. Gabriela & Co. produces the 150,000 units in 100 batches of 1,500 units each.

*Total material handling and setup costs equal fixed clerical costs of $9,000 (to support material handling and setup) plus variable setup costs of $200 per batch ($200 x 100 batches = $20,000). Total Mixed Overhead $9,000 + $20,000 = $29,000.

What is the current cost per unit for Part #2? Show your computation. (Worth 1 pt.)

Gabriela & Co. anticipates that next year the 150,000 units of Part #2 expected to be sold will be manufactured in 150 batches of 1,000 units each. Mixed Overhead Variable setup costs per batch are expected to decrease to $100. There is no effect on the fixed clerical costs to support material handling and setup costs in the Mixed Overhead. Gabriela & Co. plan to continue to produce 150,000 next year at the same variable manufacturing costs per unit as this year. Fixed costs are expected to remain the same as this year.

Alec Enterprises offers to sell the same part to Gabriela & Co. for $0.55. Should Gabriela & Co. continue to manufacture the part or buy it from Alex Enterprises? Show all your computations. (Worth 3.5 pts.)

Now assume that the $9,000 in fixed clerical salaries to support material handling and setup will not be incurred if Part #2 is purchased from Alec Enterprises. Should Gabriela & Co. buy the part or continue to make the part? Show your computations. (Worth 3 pts.)

Now assume that if Gabriela & Co. buys the part from Alec Enterprises, it can use the facilities previously used to manufacture Part #2 to produce Part #3 for Krystas Company. The expected future operating income is $18,000. (Worth 3 pts.)