Cullumber Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 12,400 of the assembly part at $6 per unit. If the offer is accepted, Cullumber will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, that Cullumber will realize by buying the part. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses e.g. (45)) Variable manufacturing costs Fixed manufacturing costs Purchase price Total annual cost The decision should be to $ make Make the part. 62000 37200 99200 Buy 74400 0 74400 $ Net Income Increase (Decrease) 62000 37200 74400 24800
Cullumber Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 12,400 of the assembly part at $6 per unit. If the offer is accepted, Cullumber will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, that Cullumber will realize by buying the part. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses e.g. (45)) Variable manufacturing costs Fixed manufacturing costs Purchase price Total annual cost The decision should be to $ make Make the part. 62000 37200 99200 Buy 74400 0 74400 $ Net Income Increase (Decrease) 62000 37200 74400 24800
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cullumber Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making an assembly part for its finished product. A supplier
offers to make 12,400 of the assembly part at $6 per unit. If the offer is accepted, Cullumber will save all variable costs but no fixed
costs. Prepare an analysis showing the total cost saving, if any, that Cullumber will realize by buying the part. (Enter negative amounts
using either a negative sign preceding the number eg.-45 or parentheses eg. (45).)
Variable manufacturing
costs
Fixed manufacturing
costs
Purchase price
Total annual cost
The decision should be to
$
Make
make the part.
62000
37200
99200
Buy
74400
74400
$
Net Income
Increase (Decrease)
62000
37200
74400
24800
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