Question

Check my wo 2 Gilberto Company currently manufactures 84,000 units per year of one of its crucial parts. Variable costs are $2.90 per unit, fixed costs related to making this part are $94,000 per year, and allocated fixed costs are $81,00 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 $4.10 per unit guaranteed for a three-year period. 4 points Calculate the total incremental cost of making 84,000 and buying 84,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier? Skipped Complete this question by entering your answers in the tabs below. eBook Hint Outside Costs to Make Costs to Buy Print Supplier References Calculate the total incremental cost of making 84,000 units. (Round cost per unit answers to 2 decimal places.) Incremental Costs to Make Total Relevant Costs Relevant Amount per Relevant Fixed Costs Unit Total incremental cost to make 0 Costs to Buy > Costs to Make

Answer 1

cost to make

	relevant per unit	relevant fixed cost	total relevant cost
variable cost per unit	2.90$		243600(84000*2.90)
fixed manufacturing costs		94000	94000
cost to make			337600$

cost to buy

	relevant per unit	relevant fixed cost	total relevant cost
purchase per unit	4.10		344400[4.10*84000]
cost to make			344400$

3.cost of buying is more than cost of making

so it should make the product