Homework: Cost Behavior & Decisions Save Score: 0 of 1 pt 4 of 6 (0 complete) HW

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Homework: Cost Behavior & Decisions Save Score: 0 of 1 pt 4 of 6 (0 complete) HW Score: 0%, 0 of 6 pts E3-40 (similar to Question Help Quality Company manufactures gear model G37, which is used in several of its farm-equipment products. Annual production volume of G37 is 30,000 units. Unit costs G37 are as follows: EB (Click the icon to view the unit costs.) Altematively, Quality can purchase gear model G37 from an outside supplier for $160 per unit. If G37 is outsourced, Quality can use the facility where G37 is currently Na manufactured for production of another gear-model G49. This would save Quality $113,000 in facolity rental and other costs presently incurred. Du Requirement Should Quality make or buy G37? By how much will Quality be better off by choosing your decision rather than the alternative? u Should Quality make or buy G37? By how much will Quality be better off by choosing your decision rather than the altenative? Complete the following analysis of the cost to purchase the gear model G37. (Use a parentheses or minus sign to show a net additional cost of purchasing the G37 Leave unused cellis blank.) Item Savings Relevant amount oK Additional costs: Choose from any list or enter any number in the input fields and then click Check Answer Clear All Check Answer

Explanation / Answer

A B=A*30000 Savings: Unit Cost TotalCost Direct material cost $65 $1,950,000 Direct labor cost $40 $1,200,000 Variable Overhead cost $15 $450,000 Facility rental and other costs $19 $113,000 Additional Cost: Purchase Cost $160 ($4,800,000) Net additional cost of purchasing ($1,087,000) QUALITY SHOULD   MAKE   G37

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