Gilberto Company currently manufactures 65,000 units per year of one of its crucial parts. Variable costs are $1.95 per unit, fixed costs related to making this part are $75,000 per year, and allocated fixed costs are $62,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Gilberto is considering buying the part from a supplier for a quoted price of $3.25 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 65,000 units. Incremental Costs to Make Relevant Relevant Total Amount per Fixed Costs Relevant Costs Unit Variable cost per unit $65,000.00 126,750 Fixed manufacturing costs Allocated fixed costs Total incremental cost to make 126,750

Explanation:

                  cost of making in-house

Variable cost  = 1.95 * 65,000 = 126,750

Related fixed cost =                      75,000

Unavoidable fixed cost=               62,000

Total cost of manufacturing =      263,750.

                         cost of buying

Unit cost = 3.25*65,000 =            211,250

Unavoidable fixed cost =               62,000

Total cost of buying =                     273,250   .

Cost of buying is higher than the cost of making  

Incremental cost  buying = 273,250-263,250 = 9,500    

Recommendation        

Gilberto should manufacture in - house instead of buying.

hi : ) i found this so i hope this !

"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"

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