Waterway Industries uses 20000 units of Part A in producing its products. A supplier offers to...
Waterway Industries uses 20000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $10 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of not buying Part A from the supplier is
Homework Answers
Opportunity cost = Benefit foregone due to alternative action
Opportunity foregone = (7-10)*20,000 units
= 3 *20,000 units
= $60,000
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Waterway Industries uses 20000 units of Part A in producing its
products. A supplier offers to...
Question 6 (4 points) Max Company uses 20,000 units of Part A in producing its products....
Question 6 (4 points) Max Company uses 20,000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is a) $20,000. Ob) $0. Oc) $160,000. O d) $140,000.
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Gilberto Company currently manufactures 88,000 units per year of one of its crucial parts. Variable costs are $3.10 per unit, fixed costs related to making this part are $98,000 per year, and allocated fixed costs are $85,000 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 $4.30 per unit guaranteed for a three-year period. Calculate the total incremental cost of...
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Question 6 (4 points) Max Company uses 20,000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is a) $20,000. Ob) $0. Oc) $160,000. O d) $140,000.
Gilberto Company currently manufactures 89.000 units per year of one of its crucial parts. Variable costs are $3.15 per unit, fixed costs related to making this part are $99.000 per year, and allocated fixed costs are $86,000 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 $4.35 per unit guaranteed for a three-year period Calculate the total incremental cost of...
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Gilberto Company currently manufactures 88,000 units per year of one of its crucial parts. Variable costs are $3.10 per unit, fixed costs related to making this part are $98,000 per year, and allocated fixed costs are $85,000 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 $4.30 per unit guaranteed for a three-year period. Calculate the total incremental cost of...
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