Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gilberto Company currently manufactures 70,000 units per year of one of its crucial parts. Variable costs are $3.20 per unit, fixed costs related to making

image text in transcribed
image text in transcribed
Gilberto Company currently manufactures 70,000 units per year of one of its crucial parts. Variable costs are $3.20 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. Gilberto is considering buying the part from a supplier for a quoted price of $3.40 per unit guaranteed for a three-year period. Calculate the total incremental cost of making and buying 70,000 units. Should the company continue to manufacture the part, on should it buy the part from the outside supplier? Complete this question by entering your answers in the tabs below. Inc Costs to Inc Costs to Make Buy Calculate the total incremental cost of making 70,000 units. (Round cost per unit answer to 2 decimal places.) Total Relevant Costs per Unit Incremental Costs to Make Relevant Amount Relevant Fixed Costs Variable cost per unit Fixed manufacturing costs Total incremental cost to make Inc Costs to Buy > Inc Costs to Make Inc Costs to Buy Calculate the total incremental cost of buying 70,000 units. Should the company continue to manufacture the part, or should At buy the part from the outside supplier? (Round cost per unit answer to 2 decimal places.). Incremental Costs to Buy Relevant Amount Relevant Fixed Costs Total Relevant Costs per Unit Purchase price per unit Total incremental cost to buy The component should manufacture or buy from the outside supplier

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Analysis And Decision Making

Authors: David E. Vance

1st Edition

0071406654, 9780071406659

More Books

Students also viewed these Accounting questions

Question

Discuss whether money can buy happiness.

Answered: 1 week ago

Question

What is the meaning and definition of E-Business?

Answered: 1 week ago

Question

1. What does this mean for me?

Answered: 1 week ago