Exercise 23-2 Make or buy LO P1 Gelb Company currently manufactures 42,500 units per year of a key component for its manufacturing process. Variable costs are $6.25 per unit, fixed costs related to...

Calculate the total incremental cost of making 42,500 units and buying 42,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier?

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Extracted text: Exercise 23-2 Make or buy LO P1 Gelb Company currently manufactures 42,500 units per year of a key component for its manufacturing process. Variable costs are $6.25 per unit, fixed costs related to making this component are $85,000 per year, and allocated fixed costs are $80,500 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 $3.70 per unit. Calculate the total Incremental cost of making 42,500 units and buying 42,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier? Complete this question by entering your answers in the tabs below. Outside Costs to Make Costs to Buy Supplier Calculate the total incremental cost of making 42,500 units. (Round "variable cost per unit" answers to 2 decimal places.) Incremental Costs to Make Relevant Relevant Total Relevant Amount per Fixed Costs Costs Unit Variable cost per unit Fixed manufacturing costs Total incremental cost to make < costs="" to="" make="" costs="" to="" buy="">