Emil Manufacturing incurs unit costs of $8.00 ($5.00 variable and $3.00 fixed) in making a sub-assembly part
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Question:
Emil Manufacturing incurs unit costs of $8.00 ($5.00 variable and $3.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 16,200 of the parts for $5.40 per unit. If it accepts the offer, Emil will save all variable costs and $1 of fixed costs.
Prepare an analysis showing the total cost savings, if any, that Emil will realize by buying the part. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)
Per Unit | Make | Buy | Net Income Increase (Decrease) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Number of units: | enter a number of units | ||||||||||
select an item Cost of good sold Fixed manufacturing costs Total annual costPurchase priceManufacturing overheadVariable manufacturing costs | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | |||||||
select an item Cost of good sold Total annual costManufacturing overheadPurchase priceFixed manufacturing costsVariable manufacturing costs | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | |||||||
select an item Fixed manufacturing costsManufacturing overhead Variable manufacturing costsTotal annual costPurchase priceCost of good sold | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | |||||||
select an item Fixed manufacturing costs Manufacturing overheadVariable manufacturing costsPurchase priceCost of good soldTotal annual cost | $enter a total amount | $enter a total amount | $enter a total amount |
The decision should be to select an option make the partbuy the part. |
Related Book For
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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