Gelb Company currently manufactures 52,000 units per year of a key component for its manufacturing process. Variable costs are$7.35 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $82,500 per year. Theallocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying thiscomponent from a supplier for $3.90 per unit.Calculate the total incremental cost of making 52,000 units and buying 52,000 units. Should it continue to manufacture thecomponent, or should it buy this component from the outside supplier?Complete this question by entering your answers in the tabs below.OutsideSupplierCalculate the total incremental cost of making 52,000 units. (Round "variable cost per unit" answers to 2 decimal places.)Incremental Costs to MakeRelevantAmount perUnitCosts to Make Costs to BuyVariable cost per unitFixed manufacturing costsTotal incremental cost to makeRelevantFixed Costs Gelb Company currently manufactures 52,000 units per year of a key component for its manufacturing process. Variable costs are$7.35 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $82,500 per year. Theallocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying thiscomponent from a supplier for $3.90 per unit.Calculate the total incremental cost of making 52,000 units and buying 52,000 units. Should it continue to manufacture thecomponent, or should it buy this component from the outside supplier?Complete this question by entering your answers in the tabs below.Costs to Make Costs to BuyOutsideSupplierCalculate the total incremental cost of buying 52,000 units. (Round "purchase price per unit" answers to 2 decimal places.)Incremental Costs to BuyRelevantAmount perUnitPurchase price per unitTotal incremental cost to buyRelevantFixed Costs< Costs to MakeTotal RelevantCostsOutside Supplier >

Incremental cost refers to the total expenses involved in order to produce an extra unit of a…

mpany currently manufactures 52,000 units per year of a key compa er unit, fixed costs related to making this component are $67,000 per d fixed costs are unavoidable whether the company makes or buys th ent from a supplier for $3.90 per unit. e the total incremental cost of making 52,000 units and buying 52,00 ent, or should it buy this component from the outside supplier? plete this question by entering your answers in the tabs below. o Make Costs to Buy Outside Supplier

mpany currently manufactures 52,000 units per year of a key compa er unit, fixed costs related to making this component are $67,000 per d fixed costs are unavoidable whether the company makes or buys th ent from a supplier for $3.90 per unit. e the total incremental cost of making 52,000 units and buying 52,00 ent, or should it buy this component from the outside supplier? plete this question by entering your answers in the tabs below. o Make Costs to Buy Outside Supplier

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...

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Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of 1,350 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of 900 per unit. a. If a transfer price of 1,000 per unit is established and 75,000 units of materials are transferred, with no reduction in the Components Divisions current sales, how much would Ziegler Inc.s total operating income increase? b. How much would the Instrument Divisions operating income increase? c. How much would the Components Divisions operating income increase?
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