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Please help me find what I am missing in this question. Gilberto Company currently manufactures 50,000 units per year of one of its crucial parts.
Please help me find what I am missing in this question.
Gilberto Company currently manufactures 50,000 units per year of one of its crucial parts. Variable costs are $1.50 per unit, fixed costs related to making this part are $50,000 per year, and allocated fixed costs are $45,000 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 $2.70 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 50,000 and buying 50,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier? Complete this question by entering your answers in the tabs below Outside Costs to Make Costs to Buy Calculate the total incremental cost of making 50,000 units. (Round cost per unit answer to 2 decimal places.) Incremental Costs to Make RelevantRelevant fixed Total relevant costs costs Unit Variable cost per unit Fixed manufacturing costs 75,000 1.50 95,095,000 95,000$ $S Total incremental cost to make 170,000 Calculate the total incremental cost of buying 50,000 units. (Round cost per unit answer to 2 decimal places.) Incremental Costs to Buy Relevant Relevant Total relevant costs Amount per Unit fixed costs 2.70 0.90 135,000 urchase price per unit ixed manufacturing costs S 45,000 Total incremental cost to buy 180,000 Should the company continue to manufacture the part, or should it buy the part from the outside supplier? Should Gilberto make the part or purchase it from the outside supplier? MakeStep by Step Solution
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