Kando Company incurs a $12.00 per unit cost for Product A, which it currently ma

Question

Kando Company incurs a $12.00 per unit cost for Product A, which it currently manufactures and sells for $13.50 per unit. Instead of manufacturing and selling this product, the company can purchase it for $6.00 per unit and sell it for $10.80 per unit. If it does so, unit sales would remain unchanged and $6.00 of the $12.00 per unit costs assigned to Product A would be eliminated 1. Prepare an Incremental cost analysis. Should the company continue to manufacture Product A or purchase it for resale? (Round your answers to 2 decimal places.) Manufacture Product A Purchase Product A Sales 13.50 Costs Avoidable costs Unavoidable costs Cost to purchase Total costs The company should:

Explanation / Answer

Company should make and sell. so they can earn an additional income of $2.70($13.50-$10.80)

Manufacture product A Purchase product A Sales $                                     13.50 $                             10.80 Costs Avoidable costs $                                       6.00 Unavoidable costs $                                       6.00 $                               6.00 Cost to purchase $                               6.00 Total costs $                                     12.00 $                             12.00

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