Gilberto Company currently manufactures 66,000 units per year of one of its crucial parts. Variable costs are $2.00 per unit, fixed costs related to making this part are $76,000 per year, and allocated fixed costs are $63,000 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 $3.30 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 66,000 and buying 66,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier OutsideCosts to Make Costs to BuySupplierCalculate the total incremental cost of making 66,000 units. (Round cost per unit answers to 2 decimal places.)Incremental Costs to MakeRelevant Amount per Relevant FixedCostsTotal RelevantCostsUnitTotal incremental cost to makeCosts to MakeCosts to Buy> SupplierCalculate the total incremental cost of buying 66,000 units. (Round cost per unit answers to 2 decimal placeIncremental Costs to BuyRelevant Amount Relevant Fixed Total RelevantCostsper UnitCostsTotal incremental cost to buy( Costs to MakeOutside Supplier >

Incremental cost: Incremental cost is the analysis of the costs in different avenues, which could be…

Answered: Outside Costs to Make Costs to Buy…

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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Gilberto Company currently manufactures 66,000 units per year of one of its crucial parts. Variable costs are $2.00 per unit, fixed costs related to making this part are $76,000 per year, and allocated fixed costs are $63,000 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 $3.30 per unit guaranteed for a three-year period.

Calculate the total incremental cost of making 66,000 and buying 66,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier

Outside
Costs to Make Costs to Buy
Supplier
Calculate the total incremental cost of making 66,000 units. (Round cost per unit answers to 2 decimal places.)
Incremental Costs to Make
Relevant Amount per Relevant Fixed
Costs
Total Relevant
Costs
Unit
Total incremental cost to make
Costs to Make
Costs to Buy>

Supplier
Calculate the total incremental cost of buying 66,000 units. (Round cost per unit answers to 2 decimal place
Incremental Costs to Buy
Relevant Amount Relevant Fixed Total Relevant
Costs
per Unit
Costs
Total incremental cost to buy
( Costs to Make
Outside Supplier >

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