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Mo-Kan Company incurs a $6 per unit cost for Product A, which it currently manufactures and sells for $9 per unit. Instead of manufacturing and
Mo-Kan Company incurs a $6 per unit cost for Product A, which it currently manufactures and sells for $9 per unit. Instead of manufacturing and selling this product, the company can purchase Product B for $5 per unit and sell it for $8 per unit. If it does so, unit sales would remain unchanged and $5 of the $6 per unit costs assigned to Product A would be eliminated. |
1. | Prepare Incremental cost analysis. (Input all amounts as positive values. Round your answers to 2 decimal places. Omit the "$" sign in your response.) |
Incremental cost analysis | |
Costs of purchasing: | |
Cost to purchase Product B | $ |
Revenue loss from reduced price | |
Total cost of purchasing Product B | |
Costs eliminated if Product B purchased | |
Net incremental cost of purchasing Product B | $ |
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