Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 78,000 units. (Round cost per unit answers to 2 decimal places.) Incremental Costs to Make Relevant Amount per Relevant Fixed Total Relevant Unit Costs Costs Total incremental cost to make Incremental Costs to Buy Relevant Amount Relevant Fixed Costs Total Relevant per Unit Costs Total incremental cost to buy
Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 78,000 units. (Round cost per unit answers to 2 decimal places.) Incremental Costs to Make Relevant Amount per Relevant Fixed Total Relevant Unit Costs Costs Total incremental cost to make Incremental Costs to Buy Relevant Amount Relevant Fixed Costs Total Relevant per Unit Costs Total incremental cost to buy
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Gilberto Company currently manufactures 78,000 units per year of one of its crucial parts. Variable costs are $2.60 per unit, fixed costs related to making this part are $88,000 per year, and allocated fixed costs are $75,000 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 $3.80 per unit guaranteed for a three-year period.
Calculate the total incremental cost of making 78,000 and buying 78,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier?
Transcribed Image Text:Costs to Make Costs to Buy
Outside
Supplier
Calculate the total incremental cost of making 78,000 units. (Round cost per unit answers to 2 decimal places.)
Incremental Costs to Make
Relevant Amount per Relevant Fixed
Total Relevant
Unit
Costs
Costs
Total incremental cost to make
Transcribed Image Text:Incremental Costs to Buy
Relevant Amount
Relevant Fixed
Costs
Total Relevant
per Unit
Costs
Total incremental cost to buy
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