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Managerial Accounting... This is the second time I posted this question. Initially, I got the entire problem wrong and was perplexed as to why. I
Managerial Accounting... This is the second time I posted this question.
Initially, I got the entire problem wrong and was perplexed as to why. I posted the question to Chegg (with my initial incorrect answer) and the Expert reposted portions of my incorrect answer. Whoever answers this question, can you explain how you came to the answer, please? Thank you.
CHEGG EXPERT ANSWER (Incorrect)
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? Answer is complete but not entirely correct. 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 65,000 units. (Round cost per unit answers to 2 decimal places.) Incremental Costs to Make Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs $ 2.00 X $ Variable cost per unit Fixed manufacturing costs Total incremental cost to make 65,000 130,000 X 65,000 X 195,000 Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of buying 65,000 units. (Round cost per unit answers to 2 decimal places.) Incremental Costs to Buy Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs 214,500 214,500 $ 3.30 X Purchase price per unit Total incremental cost to buy Incremental costs to make Relevant amount Relevant fixed cost Total relevant costs per unit Variable cost per unit 2. 132000 Fixed cost 13000 13000 145000 Total incremental cost to make b) Calculate following Incremental costs to Buy Relevant amount Relevant fixed Total relevant per unit cost costs Purchase price per unit 3.3 217800 217800 Total incremental cost to BuyStep by Step Solution
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