Help Homework Gelb Company currently manufactures 51,500 units per year of a key

Question

Help Homework Gelb Company currently manufactures 51,500 units per year of a key component for its manufacturing process. Variable costs are $4.05 per unit, fixed costs related to making this component are $75,000 per year, and allocated fixed costs are $68,500 per year. The allocated fixed costs are unavoldable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.50 per unit Calculate the total incremental cost of making 51,500 and buying 51,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? Round "purchase price per unit" answer to 2 decimal places.) Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Supplier Calculate the total incremental cost of making 51,500 units. (Round "vaniable cost per unit" answer to 2 decimal places.) Incremental Costs to Make Relevant Amount per Total Relevant Costs Relevant Fixed Costs Total incremental cost to make Cests to Buy K Prev 2 of 4 Next > MacBook Air

Explanation / Answer

1 Revevant amount Relevant Total per unit Fixed cost Relevant costs 51500 4.05 208575 68500 68500 Total increment cost to make 277075 2 Revevant amount Relevant Total per unit Fixed cost Relevant costs 51500 3.5 180250 0 Total increment cost to buy 180250 3 Should buy

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