Complete this question by entering your answers in the tabs below. Outside Costs to Make Costs to Buy Supplier Calculate the total incremental cost of buying 52,000 units. (Round "purchase price per unit" answers to 2 de Incremental Costs to Buy Relevant Amount per Relevant Fixed Costs Total Relevant Costs Unit

Cornerstones of Cost Management (Cornerstones Series)
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Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...
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Goldberg Company currently manufactures 52,000 units per year of a key component for its manufacturing process. Variable costs are
$4.05 per unit, fixed costs related to making this component are $69,000 per year, and allocated fixed costs are $70,500 per year. The
allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this
component from a supplier for $3.70 per unit.
Calculate the total incremental cost of making 52,000 units and buying 52,000 units. Should it continue to manufacture the
component, or should it buy this component from the outside supplier?
Complete this question by entering your answers in the tabs below.
Outside
Costs to Make
Costs to Buy
Supplier
Calculate the total incremental cost of buying 52,000 units. (Round "purchase price per unit" answers to 2 decimal places.)
Incremental Costs to Buy
Relevant
Amount per
Relevant
Fixed Costs
Total Relevant
Costs
Unit
Purchase price per unit
Total incremental cost to buy
< Costs to Make
Outside Supplier
>
Transcribed Image Text:Goldberg Company currently manufactures 52,000 units per year of a key component for its manufacturing process. Variable costs are $4.05 per unit, fixed costs related to making this component are $69,000 per year, and allocated fixed costs are $70,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 52,000 units and buying 52,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Outside Costs to Make Costs to Buy Supplier Calculate the total incremental cost of buying 52,000 units. (Round "purchase price per unit" answers to 2 decimal places.) Incremental Costs to Buy Relevant Amount per Relevant Fixed Costs Total Relevant Costs Unit Purchase price per unit Total incremental cost to buy < Costs to Make Outside Supplier >
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Incremental cost or Incremental revenue is used when there is a comparison of the current situation and the proposed situation. It is the technique that evaluates the cost difference between the alternative by eliminating the sunk costs and the similar costs between the alternatives.

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