Question

Question 3 Marigold Industries incurs unit costs of $8 (95 variable and $3fied) in making an assembly part for its finished product. A supplier offers to make 10,300 of the assembly part at $6 per unit. If the offer is accepted, Marigold will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving.cany, Marigold will realize by buying the part. (If amount decreases net income then enter the amount using either a negative sign preceding the number .g.-45 or parentheses g. (45).) Net Income Increase (Decrease) Make Buy Study Variable manufacturing costs Fixed manufacturing costs Purchase price Total annual cost The decision should be to the part.

Answer 1

Marigold Industries
	Make	Buy	Net Income Inc. ( dec.)
Variable Mfg. Costs ( 5 * 10300 )	51500		-51500
Fixed Mfg. costs( 3 * 10300 )	30900	30900	0
Purchase price( 6 * 10300 )		61800	-61800
Total Annual Cost	82400	92700	-10300
The decision should be to make the part.