Manson Industries incurs unit costs of $6 ($4 variable and $2 fixed) in making a

Question

Manson Industries incurs unit costs of $6 ($4 variable and $2 fixed) in making an assembly part for its finished product. A supplier offers to make 17,300 of the assembly part at $5 per unit. If the offer is accepted, Manson will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, Manson 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).)

Brief Exercise 21-4 Manson Industries incurs unit costs of $6 ($4 variable and $2 fixed) in making an assembly part for its finished product. A supplier offers to make 17,300 of the assembly part at $5 per unit. If the offer is accepted, Manson will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, Manson 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). Net Income Increase (Decrease) Make Buy Variable manufacturing costs Fixed manufacturing costs Purchase price s Total annual cost The decision should be the part. make buy LINK TO TEXT

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Make Buy Net Income Increase (Decrease) Variable Manufacturing costs            69,200.00       (69,200.00) Fixed Manufacturing costs            34,600.00                34,600.00                         -   Purchase price                86,500.00          86,500.00 Total Annual cost          103,800.00              121,100.00          17,300.00 The decision should be to make   the part as it will result in savings of $17,300.

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