Answer:
Net incremental cost of buying <u>(10,000). </u> \
Gilberto Company should produced the parts internally . Doing so would saving its $10,000 per year
Explanation:
The relevant cash flow from the accepting the offer of the outside suppliers include
Extra variable cost of buying
Savings in direct fixed manufacturing overhead
Unit variable cost of making: =$2
$
Variable cost of external purchase ($3.2× 50,000) 160,000
Variable cost of making ($2× 50,000) <u>(100,000 )
</u>
Extra variable cost of buying (60,000
)
Savings in direct fixed cost <u>50,000</u>
Net incremental cost of buying <u> (10,000)</u>
