Ask Question
7 April, 07:15

Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 57,000 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 57,000 units of RX5 for $20.00 per unit. Required: 1. Calculate the incremental costs of making and buying component RX5.

+3
Answers (2)
  1. 7 April, 07:52
    0
    To Make Incremantal Costs = $ 912,000

    To Buy Incremental Costs = $ 1,140,000

    Explanation:

    incremental costs of making and buying component RX5

    To Make Incremantal Costs

    Direct materials $ 5.00 * 57,000 units 285,000

    Direct labor $9.00 * 57,000 units 513,000

    Overhead $10.00 * 20% * 57,000 units 114,000

    Totals 912,000

    To Buy Incremental Costs

    Purchase Price $20.00 * 57,000 units 1,140,000

    Totals 1,140,000

    Note : Fixed Overheads have been excluded as they are incurred whether or not the Haver Company makes or buys the component RX5. Thus not incremental.
  2. 7 April, 07:58
    0
    Answer

    Making the product 922,000

    Buying the product 1,140,000

    Explanation:

    Total Incremental Costs of:

    Making the Units Buying the Units

    Direct Material295,000 (5*57000)

    Direct Labor 513,000

    (9*57000)

    Overhead 114,000

    (10 - (10*80%) * 57000

    Purchase Price 1,140,000 (20*57000)

    Total Costs 922,000 1,140,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 57,000 units of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers