Ivanhoe Industries incurs unit costs of $7 ($4 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 17,800 of the assembly part at $5 per unit. If the offer is accepted, Ivanhoe will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, that Ivanhoe will realize by buying the part. (Enter negative amounts using either a negative sign preceding the number e.g. -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. 43600 32700 i 76300 $ $ Buy i 32700 54500 87200 $ $ Net Income Increase (Decrease) 43600 -54500 -10900 C Ac Q Ac

Ivanhoe Industries incurs unit costs of $7 ($4 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 17,800 of the assembly part at $5 per unit. If the offer is accepted, Ivanhoe will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, that Ivanhoe will realize by buying the part. (Enter negative amounts using either a negative sign preceding the number e.g. -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. 43600 32700 i 76300 $ $ Buy i 32700 54500 87200 $ $ Net Income Increase (Decrease) 43600 -54500 -10900 C Ac Q Ac

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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