(Solved):Gelb Company currently manufactures 54,500 units per year of a key component for its…

 

Question

Gelb Company currently manufactures 54,500 units per year of a key component for its manufacturing process. Variable costs are $7.35 per unit, fixed costs related to making this component are $77,000 per year, and allocated fixed costs are $74,500 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.

Required:

1. Calculate

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