Lockrite Security Company manufacturers home alarms. Currently, it is manufactur

Question

Lockrite Security Company manufacturers home alarms. Currently, it is manufacturing one of its components at a total cost of $39 which includes fixed costs of $15 per unit. An outside provider of this component has offered to sell Lockrite the component for $33.
What is the cost savings for continuing to make the component?

Differential cost to purchase:

( Purchases price of the componey/

Variable manufacturing cots)

$

Differential cost to manufacture:

( Purchases price of the componey/

Variable manufacturing cots)

$

Cost savings from continuing to make the component

$

Differential cost to purchase:

( Purchases price of the componey/

Variable manufacturing cots)

$

Differential cost to manufacture:

( Purchases price of the componey/

Variable manufacturing cots)

$

Cost savings from continuing to make the component

$

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Differential cost to purchase: Purchases price of the componey                      33.00 Differential cost to manufacture: Variable manufacturing costs = 39 - 15                      24.00 Cost savings from continuing to make the component = 33 - 24                        9.00

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