Problem 3 Question Help * The ABC Company had two options for sourcing molded pl

Question

Problem 3 Question Help * The ABC Company had two options for sourcing molded plastic parts, and these options are presented in the table below. Now, the ABC Company has identified another potential supplier for the molded plastic parts. The new supplier has bid S0.0600 per part but also will impose a shipping and handling charge of $0.0100 per unit. Additional inventory handling charges should amount to S0.0020 per unit. Finally, purchasing costs are estimated at $40 per month for the length of the 36-month contract. Ncte that the forecasted demand is a total of 1 million units over the 36 months. Click the icon to view the total cost analysis for the sourcing decision at ABC. More Into a. The total cost per unit for the new supplier is S-(Enter your response rounded to four decimal places.) Insourcing option $0.0800 S0.0400 S0.0100 $0.0057 S0.0029 Direct labor Benefits (50%) Direct material Indirect labor Benefits (50%) Equipment depreciation Overhead $8,000 absorbed over 1,000,000 units S0.0080 S0.0400 S0.0700 S0.2566 $70,000 absorbed over 1,000,000 units Total cost per unit Outsourcing option Purchase price Shipping and handling Inventory charges Administrative costs Total cost per unit 1200 $0.0050 S0.0040 S0.0010 S0.1300 Savings per unit Total savings (1 milion units) S0.1266 $126,600

Explanation / Answer

Total cost per unit for the new supplier = cost price + shipping and handling charge + inventory handling charge + purchasing costs

= 0.06 + 0.01 + 0.002 + 40*36/1000000

= $ 0.07344

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