Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Thomas Company currently manufactures one of its crucial parts at a cost of $5.10 per unit. This cost is based on a normal production rate
Thomas Company currently manufactures one of its crucial parts at a cost of $5.10 per unit. This cost is based on a normal production rate of 60,000 units per year. Variable costs are $3.60 per unit , fixed costs related to making this part are $60,000 per year , and allocated fixed costs are $30,000 per year 1. Allocated fixed costs are unavoidable whether the company makes or buys the parts 23 y. Thomas is considering buying the part from a supplier for a quoted price of $3.00 per unit guaranteed for a three-year period * Calculate the total incremental cost of making 60,000 units. (Omit the "$" sign in your response. Total incremental cost $ Calculate the total incremental cost of buying 60,000 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
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