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krystalhurst97
26.06.2020 •
Business
Gelb Company currently manufactures 53,500 units per year of a key component for its manufacturing process. Variable costs are $2.95 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $64,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.50 per unit. Calculate the total incremental cost of making 53,500 units and buying 53,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier
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Ответ:
Answer and Explanation:
The computation of the total incremental cost is shown below;
For making 53,500 units
ParticularsRelevant Relevant Total
Per Unit Fixed Costs Relevant Costs
Variable Cost
Per Unit $2.95 $157,825
(53,500 units × $2.95)
Fixed
Manufacturing
Costs $67,000 $67,000
Total Incremental Costs to Make $224,825
For making 53,500 units
ParticularsRelevant Relevant Total
Per Unit Fixed Costs Relevant Costs
Purchase
Price
Per Unit $3.50 $187,250
(53,500 units × $3.50)
Total Incremental Cost to Buy $187,250
The company should buy the component from the outside supplier as it saves the cost for ($224,825 - $187,250) = $37,575 plus the buying cost is less than the making cost
Ответ:
Incomplete question. However, lets' assume the stated commission in dollars is $3,000.
Explanation:
If the stated commission is $3,000, then to find the share of the commission you will receive, we need to simply multiply one half (
) by $3,000.
Which is
$1,500.
So going by this method, you can find what the real estate broker will receive out of the stated commission inside the complete question.