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Santos Company currently manufactures one of its crucial parts at a cost of $3.20 per unit. This cost is based on a normal production rate
Santos Company currently manufactures one of its crucial parts at a cost of $3.20 per unit. This cost is based on a normal production rate of 70,000 units per year. Variable costs are $1.70 per unit, fixed costs related to making this part are $70,000 per year, and allocated fixed costs are $35,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Santos is considering buying the part from a supplier for a quoted price of $2.90 per unit guaranteed for a three-year period Calculate the total incremental cost of making 70,000 units. (Omit the "$" sign in your response.) Total incremental cos Calculate the total incremental cost of buying 70,000 units. (Omit the "$" sign in your response.) Total incremental cost Should the company continue to manufacture the part, or should it buy the part from the outside supplier? Buy Make Cantrell Company has already manufactured 25,000 units of Product A at a cost of $20 per unit. The 25,000 units can be sold at this stage for $550,000. Alternatively, the units can be further processed at a $430,000 total additional cost and be converted into 4,200 units of Product B and 7,100 units of Product C Per unit selling price for Product B is $73 and for Product C is $51 1. Calculate the Incremental Net Profit (or loss) if processed further. (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.) Incremental net profit (or loss) 2. Indicate whether the 25,000 units of Product A should be processed further or not Sell without further processing Process further
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