1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Angelina_Jolie [31]
3 years ago
8

Gelb Company currently manufactures 53,500 units per year of a key component for its manufacturing process. Variable costs are $

2.95 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $64,500 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. Calculate the total incremental cost of making 53,500 units and buying 53,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier
Business
1 answer:
Airida [17]3 years ago
6 0

Answer and Explanation:

The computation of the total incremental cost is shown below;

For making 53,500 units

<u>Particulars Relevant     Relevant            Total </u>

<u>                        Per Unit    Fixed Costs        Relevant Costs </u>

Variable Cost

Per Unit           $2.95                          $157,825

                                                                    (53,500 units × $2.95)

Fixed

Manufacturing

Costs                        $67,000           $67,000

Total Incremental Costs to Make  $224,825

For making 53,500 units

<u>Particulars Relevant     Relevant            Total </u>

<u>                        Per Unit    Fixed Costs        Relevant Costs </u>

Purchase

Price

Per Unit        $3.50                                  $187,250

                                                                    (53,500 units × $3.50)

Total Incremental Cost to Buy   $187,250

The company should buy the component from the outside supplier as it saves the cost for ($224,825 - $187,250) = $37,575 plus the buying cost is less than the making cost

You might be interested in
Westford Corporation has $185 million dollars of interest-bearing debt outstanding at the end of fiscal 2014 year. In addition,
Ratling [72]

Answer:

B) 9.1%

Explanation:

Cost of debt is the interest rate paid by a company due to borrowing money; i.e  debt from investors.

$185million in debt is the face value of debt that Westford Corporation had and the $26 million dollars of interest expense is the cost of the debt in dollars;

First, find pretax cost of debt ;

Pretax cost of debt = (Interest expense / Face value of debt )*100

= (26,000,000/ 185,000,000 )*100

=0.1405 *100

= 14.05%

Next, use pretax cost of debt to find after-tax cost of debt;

After-tax cost of debt = Pretax cost of debt (1-tax)

= 14.05% *(1-0.35)

= 9.13%

Therefore, Westford's cost of debt capital is 9.1%

6 0
3 years ago
Craig's Car Wash Inc. is considering a project that has the following cash flow and cost of capital (r) data. What is the projec
otez555 [7]

Answer: B - 2.09 years

Explanation:

Discounted payback period calculates how long it takes for the amount invested in a project to be recovered from the cash flows generated from the project.

The calculation used in getting the answer is found in the attachment.

6 0
3 years ago
The list price on Boyton's catalog indicated that product A sells for $3,000, with a trade discount of 5%. Boyton sells the good
Alexeev081 [22]

Answer:

B) $2,850

Explanation:

1: Find the discount: $3,000*5% = $150

2: Subtract the discount: $3,000 - $150 = $2,850

4 0
3 years ago
Mr. smith wishes to retire in 11 years. when he retires he would like to have $500,000 in his bank account. mr. smith's bank pay
Simora [160]
The formula is
A=p (1+r)^t
A future value 500000
P present value. ?
R interest rate 0.06
T time 11 years
Solve the formula for p by dividing both sides by (1+r)^t to get
P=A/(1+r)^t
P=500,000÷(1+0.06)^(11)
P=263,393.76

he should deposit 263393.76 now to attain 500000

Hope it helps!
4 0
3 years ago
Pool line is the manufacturer of a pool cleaning system that has been called by the pool construction industry, "the miracle we
attashe74 [19]

The answer is Pool Cleaning Systems. The relevant market product is Pool Cleaning System. It is engineered to clean the entire pool, including floors, steps, benches, even spas. Nozzles pop up consecutively to direct a power jet of water to direct debris towards the MDX-R3 drain.

8 0
3 years ago
Other questions:
  • 10. Regarding veal, lamb, or pork, the term noisette would properly refer to
    5·1 answer
  • The federal government doesn't have a capital budget; however, private enterprises do have a capital budget and when they invest
    7·1 answer
  • Last year, Nikkola Company had net sales of $2,299,500,000 and cost of goods sold of $1,755,000,000. Nikkola had the following b
    14·1 answer
  • The Constitution sets forth specific powers that can be exercised by the national government and provides that t national govern
    14·1 answer
  • Resource Company acquired a tract of land containing an extractable natural resource. Cooper is required by the purchase contrac
    6·1 answer
  • What might labor unions bargain for
    12·1 answer
  • If a company that is in a 35 % tax bracket invests in assets that increase its depreciation expense by $ 562 per year, its chang
    12·1 answer
  • Which of the following was the first emission control device?
    12·1 answer
  • Suppose that a labor economist finds that one of her research subjects has earned significantly higher wages throughout his life
    12·1 answer
  • Intuitive decision making uses ____ to make decisions
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!