Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 66,00
0 units of RX5 follows. Direct materials$5.00 Direct labor 9.00 Overhead 10.00 Total costs per unit 24.00 Direct materials and direct labor are 100% variable. Overhead is 80% fixed. An outside supplier has offered to supply the 66,000 units of RX5 for $19.00 per unit. Required: 1. Calculate the incremental costs of making and buying component RX5.
1 answer:
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Answer:
$2.25
Explanation:
Please check the attached image for the full question used in answering this question
Breakeven sales is the quantity sold at which net income is equal to zero.
Breakeven sales = fixed cost / (price per unit - variable cost per unit )
$1,215,000 / ($80 - $35) = 27,000
If Highway 55 Studios can reduce fixed expenses by $60,750, variable cost =
27,000 = ($1,215,000 - $60,750) / ($80 - V)
27,000 = 1,154,250 / ($80 - V)
V = $37.25
Variable cost would increase by : $37.25 - $35 = 2.25
