Incremental Costs to Make 80000 units: | ||||
Relevant amount per unit | Relevant fixed costs | Total relevant costs | ||
Variable Cost | $1.50 | 120000 | ||
Fixed costs | $80,000 | 80000 | ||
Allocated fixed costs | (not relevant as unavoidable) | |||
Total incremental cost to make | 200000 | |||
Incremental Costs to Buy 80000 units: | ||||
Relevant amount per unit | Relevant fixed costs | Total relevant costs | ||
Purchase price | $3.30 | 264000 | ||
Fixed costs | $0 | 0 | ||
Allocated fixed costs | (not relevant as unavoidable) | |||
Total incremental cost to make | 264000 | |||
Decision : Gilberto should continue to make the part being low "Relevant cost of Making" |
Gilberto Company currently manufactures 80,000 units per year of one of its crucial parts. Variable costs...
Gilberto Company currently manufactures 80,000 units per year of one of its crucial parts. Variable costs are $2.40 per unit, fixed costs related to making this part are $80,000 per year, and allocated fixed costs are $40,000 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 $3.50 per unit guaranteed for a three-year period. Calculate the total incremental cost of...
Gilberto Company currently manufactures 80,000 units per year of one of its crucial parts. Variable costs are $1.50 per unit, fixed costs related to making this part are $80,000 per year, and allocated fixed costs are $40,000 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...
Gilberto Company currently manufactures 80,000 units per year of one of its crucial parts. Variable costs are $2.40 per unit, fixed costs related to making this part are $80,000 per year, and allocated fixed costs are $40,000 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 $3.50 per unit guaranteed for a three-year period. Calculate the total incremental cost of...
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Gilberto Company currently manufactures 65,000 units per year of one of its crucial parts. Variable costs are $1.95 per unit, fixed costs related to making this part are $75,000 per year, and allocated fixed costs are $62,000 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 $3.25 per unit guaranteed for a three-year period. Calculate the total incremental cost of...
Gilberto Company currently manufactures 83,000 units per year of one of its crucial parts. Variable costs are $2.85 per unit, fixed costs related to making this part are $93,000 per year, and allocated fixed costs are $80,000 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 $4.05 per unit guaranteed for a three-year period. Calculate the total incremental cost of...
Gilberto Company currently manufactures 88,000 units per year of one of its crucial parts. Variable costs are $3.10 per unit, fixed costs related to making this part are $98,000 per year, and allocated fixed costs are $85,000 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 $4.30 per unit guaranteed for a three-year period. Calculate the total incremental cost of...
Gilberto Company currently manufactures 70,000 units per year of one of its crucial parts. Variable costs are $1.80 per unit, fixed costs related to making this part are $70,000 per year, and allocated fixed costs are $35,000 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 $2.90 per unit guaranteed for a three-year period. Calculate the total incremental cost of...
Gilberto Company currently manufactures 81,000 units per year of one of its crucial parts. Variable costs are $2.75 per unit, fixed costs related to making this part are $91,000 per year, and allocated fixed costs are $78,000 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 $3.95 per unit guaranteed for a three-year period. Calculate the total incremental cost of...