Cullumber Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 12,400 of the assembly part at $6 per unit. If the offer is accepted, Cullumber will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, that Cullumber will realize by buying the part. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses e.g. (45)) Variable manufacturing costs Fixed manufacturing costs Purchase price Total annual cost The decision should be to $ make Make the part. 62000 37200 99200 Buy 74400 0 74400 $ Net Income Increase (Decrease) 62000 37200 74400 24800

Cullumber Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 12,400 of the assembly part at $6 per unit. If the offer is accepted, Cullumber will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, that Cullumber will realize by buying the part. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses e.g. (45)) Variable manufacturing costs Fixed manufacturing costs Purchase price Total annual cost The decision should be to $ make Make the part. 62000 37200 99200 Buy 74400 0 74400 $ Net Income Increase (Decrease) 62000 37200 74400 24800

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...

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