Question
Metlock Manufacturing incurs unit costs of $8.50 ($5.50 variable and $3.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to
Metlock Manufacturing incurs unit costs of $8.50 ($5.50 variable and $3.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 18,600 of the parts for $6.10 per unit. If it accepts the offer, Metlock will save all variable costs and $1.00 of fixed costs. Prepare an analysis showing the total cost savings, if any, that Metlock will realize by buying the part. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)
Per Unit | Make | Buy | Net Income Increase (Decrease) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Number of units: | enter a number of units | ||||||||||
select an item Fixed manufacturing costsVariable manufacturing costsTotal annual costCost of good soldManufacturing overheadPurchase price | $enter a dollar amount rounded to 2 decimal places | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | |||||||
select an item Variable manufacturing costsTotal annual costFixed manufacturing costsCost of good soldPurchase priceManufacturing overhead | enter a dollar amount rounded to 2 decimal places | enter a dollar amount | enter a dollar amount | enter a dollar amount | |||||||
select an item Fixed manufacturing costsCost of good soldPurchase priceTotal annual costManufacturing overheadVariable manufacturing costs | enter a dollar amount rounded to 2 decimal places | enter a dollar amount | enter a dollar amount | enter a dollar amount | |||||||
select a closing name for this statement Total annual costCost of good soldManufacturing overheadVariable manufacturing costsFixed manufacturing costsPurchase price | $enter a total amount | $enter a total amount | $enter a total amount |
The decision should be to select an option make the partbuy the part. |
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