Please help Gilberlo Company currently manufactures 65.000 units pe- year of one

Question

Please help

Gilberlo Company currently manufactures 65.000 units pe- year of one of its crucial parts. Variable costs are $1.95 per unit, fixed costs related to making this pa-t are S75.000 per year, and allocated fixed costs a-e S62.000 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 S3.25 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 65.000 units. Calculate the total incremental cost of buying 65.000 units.

Explanation / Answer

       Incremental cost to make relevant amount Relevant fixed Total relevant per unit cost costs Variable cost per unit 1.95 1.95 Fixed manufacturing costs 0.95 1.15 2.11 ( 62000/65000) ( 75000/65000) 2.90 1.15 4.06 Total cost to make 65000 units 263750                                      Incremental cost to buy relevant amount Relevant fixed Total relevant per unit cost costs Purchase price per unit 3.25 0.95 4.20 ( 62000/65000) Total incremental cost for 65000 units 273250

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---