Gelb Company currently manufactures 40,000 units per year of a key component for its manufacturing process. Variable costs are $1.95 per unit, fixed costs related to making this component are $65,000 per year, and allocated fixed costs are $58, 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.

a. Calculate the total incremental cost of making 40,000 units. (Round "variable cost per unit" answer to 2 decimal places.)

b. Calculate the total incremental cost of buying 40,000 units. (Round "Purchase price per unit" answer to 2 decimal places.)

a. $143,000

b. $140,000

Explanation:

The computation is shown below:

a. For making 40,000 units

Particulars Relevant Amount per UnitRelevant Fixed CostsTotal Relevant Costs

Variable cost per unit$1.95                                              $78,000

Fixed manufacturing costs                   $65,000             $65,000

Total incremental cost to make                                                     $143,000

The $78,000 is come from

= $1.95 × 40,000 units

= $78,000

b. And, for buying 40,000 units

Particulars  Relevant Amount per UnitRelevant Fixed CostsTotal Relevant Costs

Purchase price per unit   $3.50                                             $140,000

The $140,000 is come from

= $3.50 × 40,000 units

= $140,000

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always drive on the right side of the road.

white lines separate lanes of traffic traveling the same direction.

hashed or broken lines means you may change lanes when it is safe.

solid white lines mean stay in your lane.

yellow lines separate traffic moving in opposing directions.

hashed or broken yellow lines mean you can carefully pass, paying attention to oncoming traffic.

never cross a solid yellow line (or double yellow line).

when turning left at an intersection, pass in front of any cars that are turning left from the opposing direction (do not try to pass behind them).

use the left lane to pass other cars traveling your direction.

do not pass in the right lane unless absolutely necessary.

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come to a complete stop whenever you see pedestrians trying to cross the street.

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it is mandatory to pull over or stop at an intersection to allow an emergency vehicle to pass you if you see one traveling with lights flashing and/or a siren running.

do not overuse your car horn. horns are used almost exclusively for emergency situations or for when you feel unsafe.

explanation:

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