Metlock Manufacturing incurs unit costs of $8.50 ($5.50 variable and $3.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 18,600 of the parts for $6.10 per unit. If it accepts the offer, Metlock will save all variable costs ar $1.00 of fixed costs. Prepare an analysis showing the total cost savings, if any, that Metlock will realize by buying the part. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g.-15,000 or parenthesis, e.g. (15,000).) 146644651
Metlock Manufacturing incurs unit costs of $8.50 ($5.50 variable and $3.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 18,600 of the parts for $6.10 per unit. If it accepts the offer, Metlock will save all variable costs ar $1.00 of fixed costs. Prepare an analysis showing the total cost savings, if any, that Metlock will realize by buying the part. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g.-15,000 or parenthesis, e.g. (15,000).) 146644651
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give image format
Transcribed Image Text:Number of units:
Variable manufacturing costs
Fixed manufacturing costs
Total annual cost
The decision should be to
V
buy the part
18600
+A
$
5.50
3.00
5.90
$
$
102300
55800
158100
Transcribed Image Text:Metlock Manufacturing incurs unit costs of $8.50 ($5.50 variable and $3.00 fixed) in making a sub-assembly part for its finished
product. A supplier offers to make 18,600 of the parts for $6.10 per unit. If it accepts the offer, Metlock will save all variable costs and
$1.00 of fixed costs.
Prepare an analysis showing the total cost savings, if any, that Metlock will realize by buying the part. (Round per unit answers to 2
decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or
parenthesis, e.g. (15,000).)
Number of units:
Variable manufacturing costs
Fixed manufacturing costs
18600
$
Per Unit
5.50
3.00
5.90
$
Make
7.00
102300
55800
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