Gelb Company currently manufactures 52,000 units per year of a key component for its manufacturing process. Variable costs are$7.35 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $82,500 per year. Theallocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying thiscomponent from a supplier for $3.90 per unit.Calculate the total incremental cost of making 52,000 units and buying 52,000 units. Should it continue to manufacture thecomponent, or should it buy this component from the outside supplier?Complete this question by entering your answers in the tabs below.OutsideSupplierCalculate the total incremental cost of making 52,000 units. (Round "variable cost per unit" answers to 2 decimal places.)Incremental Costs to MakeRelevantAmount perUnitCosts to Make Costs to BuyVariable cost per unitFixed manufacturing costsTotal incremental cost to makeRelevantFixed Costs Gelb Company currently manufactures 52,000 units per year of a key component for its manufacturing process. Variable costs are$7.35 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $82,500 per year. Theallocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying thiscomponent from a supplier for $3.90 per unit.Calculate the total incremental cost of making 52,000 units and buying 52,000 units. Should it continue to manufacture thecomponent, 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 BuyOutsideSupplierCalculate the total incremental cost of buying 52,000 units. (Round "purchase price per unit" answers to 2 decimal places.)Incremental Costs to BuyRelevantAmount perUnitPurchase price per unitTotal incremental cost to buyRelevantFixed Costs< Costs to MakeTotal RelevantCostsOutside Supplier >

Incremental cost refers to the total expenses involved in order to produce an extra unit of a…

mpany currently manufactures 52,000 units per year of a key compa er unit, fixed costs related to making this component are $67,000 per d fixed costs are unavoidable whether the company makes or buys th ent from a supplier for $3.90 per unit. e the total incremental cost of making 52,000 units and buying 52,00 ent, or should it buy this component from the outside supplier? plete this question by entering your answers in the tabs below. o Make Costs to Buy Outside Supplier

mpany currently manufactures 52,000 units per year of a key compa er unit, fixed costs related to making this component are $67,000 per d fixed costs are unavoidable whether the company makes or buys th ent from a supplier for $3.90 per unit. e the total incremental cost of making 52,000 units and buying 52,00 ent, or should it buy this component from the outside supplier? plete this question by entering your answers in the tabs below. o Make Costs to Buy Outside Supplier

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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McPupper Steel has products that cost $10,500 to manufacture. The products can be sold as is for $13,000 or could be processed further for a cost of $2,100 and sold for $14,000. What would be the incremental profit or (loss) of processing the products further and selling them instead of selling them as is?
Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $14. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the full-cost plus assuming 15% transfer price? Variable cost per unit $7.16 Fixed cost per unit 1.14 Division B sales price of Component X 14.5
Kent Co. manufactures a product that sells for $57.00 and has variable costs of $34.00 per unit. Fixed costs are $253,000. Kent can buy a new production machine that will increase fixed costs by $24,200 per year, but will decrease variable costs by $5.00 per unit. Compute the contribution margin per unit if the machine is purchased.
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Diversity Ltd. produces and sells a product called Star. The company is currently selling 9,560 units of the product which represent £143,400. Total fixed costs equal £66,920 and total contribution equals £66,920. Required: Considering this information, is Diversity Ltd. selling a profitable amount of its product Star and which would be your advice for the company? Which is the price per unit at which Diversity Ltd. is selling its product? Explain your answer in detail. Consider that, after an increase in the market demand of product Star, Diversity Ltd. sells 25% more units of product Star. In this new situation, is Diversity Ltd. selling a profitable amount of its product Star? Explain your answer in detail. Draw a graph related to your previous answers in a) and b). Consider the information from the graph, which would be the financial situation of Diversity Ltd. if sales decrease in more than 25%?
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Diversity Ltd. produces and sells a product called Star. The company is currently selling 9,560 units of the product which represent £143,400. Total fixed costs equal £66,920 and total contribution equals £66,920. Required: Considering this information, is Diversity Ltd. selling a profitable amount of its product Star and which would be your advice for the company? Which is the price per unit at which Diversity Ltd. is selling its product? Explain your answer in detail.Consider that, after an increase in the market demand of product Star, Diversity Ltd. sells 25% more units of product Star. In this new situation, is Diversity Ltd. selling a profitable amount of its product Star? Explain your answer in detail.Draw a graph related to your previous answers in a) and b). Consider the information from the graph, which would be the financial situation of Diversity Ltd. if sales decrease in more than 25%?
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