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Exercise 23-2 Make or buy LO P1 Gelb Company currently manufactures 55,500 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related to making this component are $81,000 per year, and allocated fixed costs are $74,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 55,500 units and buying 55,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 55,500 units. (Round "variable cost per unit" answers to 2 decimal places.) Incremental Costs to Make Variable cost per unit Fixed manufacturing costs Total incremental cost to make Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of buying 55,500 units. (Round "purchase price per unit" answers to 2 decimal places.) Incremental Costs to Buy Purchase price per unit Total incremental cost to buy Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs

Exercise 23-2 Make or buy LO P1 Gelb Company currently manufactures 55,500 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related to making this component are $81,000 per year, and allocated fixed costs are $74,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 55,500 units and buying 55,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 55,500 units. (Round "variable cost per unit" answers to 2 decimal places.) Incremental Costs to Make Variable cost per unit Fixed manufacturing costs Total incremental cost to make Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of buying 55,500 units. (Round "purchase price per unit" answers to 2 decimal places.) Incremental Costs to Buy Purchase price per unit Total incremental cost to buy Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 47P: (Appendix 11A) Cycle Time, Velocity, Conversion Cost The theoretical cycle time for a product is 30...
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Exercise 23-2 Make or buy LO P1 Gelb Company currently manufactures 55,500 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related to making this component are $81,000 per year, and allocated fixed costs are $74,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 55,500 units and buying 55,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 55,500 units. (Round "variable cost per unit" answers to 2 decimal places.) Incremental Costs to Make Variable cost per unit Fixed manufacturing costs Total incremental cost to make Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs <Costs to Make Costs to Buy > Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of buying 55,500 units. (Round "purchase price per unit" answers to 2 decimal places.) Incremental Costs to Buy Purchase price per unit Total incremental cost to buy Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs
Transcribed Image Text:Exercise 23-2 Make or buy LO P1 Gelb Company currently manufactures 55,500 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related to making this component are $81,000 per year, and allocated fixed costs are $74,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.70 per unit. Calculate the total incremental cost of making 55,500 units and buying 55,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of making 55,500 units. (Round "variable cost per unit" answers to 2 decimal places.) Incremental Costs to Make Variable cost per unit Fixed manufacturing costs Total incremental cost to make Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs <Costs to Make Costs to Buy > Costs to Make Costs to Buy Outside Supplier Calculate the total incremental cost of buying 55,500 units. (Round "purchase price per unit" answers to 2 decimal places.) Incremental Costs to Buy Purchase price per unit Total incremental cost to buy Relevant Amount per Unit Relevant Fixed Costs Total Relevant Costs
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