(Solved):Gilberto Company currently manufactures 80,000units per year of one of its crucial parts….

 

Question

Gilberto Company currently manufactures 80,000 units per year of one of its crucial parts. Variable costs are $1.80 per unit, fixed costs related to making this part are $80,000 per year, and allocated fixed costs are $40,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Gilberto is considering buying the part from a supplier for a quoted price of $3.00 per unit guaranteed

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