Answered step by step
Verified Expert Solution
Question
1 Approved Answer
PLEASE HELP ME ASAP IM SO LOST!!!n Bamey Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has
PLEASE HELP ME ASAP IM SO LOST!!!n
Bamey Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $12.90 per unit. Barney Enterprises' current cost is $18.25 per unit of the component, based on the 95,000 components that Barney Enterprises curtently produces. This current cost per unit is based on the following calculations: Read the requirements. (Click the icon to view the information.) None of Barney Enterprises' fixed costs will be eliminated if the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $27,000 of contribution margin per year. Requirement 1. If Barney Enterprises outsources the manufacturing of the component, will operating income increase or decrease? By how much? (Enter a "0" for any zero balances. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.) If Bamey Enterprises outsources the manufacturing of the component, operating income will by. Requirement 2. What is the maximum price per unit Barney Enterprises would be willing to pay if it outsources the component? Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit. Using the basic formula you determined above solve for the indifferent outsourcing cost per unit. (Round your answer to the nearest cent, $X ) The maximum price per unit Barney Enterprises would be willing to pay if it outsources the component is per unit. Data table Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started