$3.00 per unit, fixed costs related to making this part are $50,000 $55,000 per

Question

$3.00 per unit, fixed costs related to making this part are $50,000 $55,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part Gilberto is considering buying the part from a supplier for a quoted price of $3.60 per unit guaranteed for a per year, and allocated fixed costs are Calculate the total incremental cost of making 50,000 units. (Round cost per unit answers to 2 decimal places.) ental Costs to Make RelevantRelevant fixed Total relevant costs Variable cost 3.00 S 50,000 85,000 Total l cost to make Calculate the total incremental cost of buying 50,000 units. (Round cost per unit answers to 2 decimal places.) tal cost to buy

Explanation / Answer

Incremental costs to make

150,000

(3.00*50000)

Incremental costs to buy

180000

(3.60*50000)

Relevant amount per unit relevant fixed costs total relevant costs Variable cost per unit   3.00

150,000

(3.00*50000)

Fixed manufacturing costs 50,000 50,000 Total incremental costs to make 200,000

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