# Gelb Company currently manufactures 51,500 units per year of a key component for its manufacturing process. Variable costs are $5.15 per unit, fixed costs related to making this component are$65,000 per year, and allocated fixed costs are $78,500 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$3.90 per unit. Calculate the total incremental cost of making 51,500 units and buying 51,500 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier?

$343,725;$200,850

Explanation:

(a) The total incremental cost of making 51,500 units is calculated as below:

Total Relevant Costs:

= Variable Cost Per Unit + Fixed Manufacturing Costs

= (Relevant Amount Per Unit × No. of units) + Fixed Manufacturing Costs

= ($5.15 × 51,500) +$78,500

= $265,225 +$78,500

= $343,725 Therefore, the total incremental cost of making 51,500 units is$343,725.

(b) The total incremental cost of buying 51,500 units is determined as below:

Total Relevant Costs = Purchase Price Per Unit × No. of units

= $3.90 × 51,500 =$200,850

Therefore, the total incremental cost of buying 51,500 units is $200,850. (c) The company should buy the component from outside supplier as it results in a lower total incremental cost of$200,850.

## Related Questions

On January 1, Year 1, Stratton Company borrowed $100,000 on a 10-year, 7% installment note payable. The terms of the note require Stratton to pay 10 equal payments of$14,238 each December 31 for 10 years. The required general journal entry to record the first payment on the note on December 31, Year 1 is:

Dr interest expense $7,000 Dr notes payable$7,238

Cr cash                                     $14,238 Explanation: The first task is to compute interest expense on the loan in year 1 which is shown below: interest expense=$100,000*7%

interest expense=$7,000 Principal repayment=repayment-interest repayment Principal repayment=$14,238-$7,000=$7,238

The double entries are to debit interest expense and notes payable with $7,000 and$7,238 respectively while cash is credited with $14,238 as an outflow of cash. Askew Company uses a periodic inventory system. The June 30, 2018, year-end trial balance for the company contained the following information: Account Debit Credit Merchandise inventory, 7/1/17 32,800 Sales 388,000 Sales returns 12,800 Purchases 248,000 Purchase discounts 6,800 Purchase returns 10,800 Freight-in 18,600 In addition, you determine that the June 30, 2018, inventory balance is$40,800. Required: 1. Calculate the cost of goods sold for the Askew Company for the year ending June 30, 2018. 2. Prepare the year-end adjusting entry to record cost of goods sold.

a. The computation of the cost of goods sold is shown below:

Beginning inventory               $32,800 Add: Net purchase Purchase$248,000

Less: Purchase discount -$6,800 Less: Purchase returns -$10,800

Add: Freight in $18,600 Total net purchased$249,000

Less: ending inventory          -$40,800 Cost of goods sold$241,000

2. The year end adjusting entry is

Cost of goods sold Dr $241,000 Ending inventory Dr$40,800

Purchase discount Dr $6,800 Purchase returns Dr$10,800

To Beginning inventory $32,800 To Purchase$248,000

To freight in $18,600 (Being the cost of goods sold is recorded) ​________ is an Internet marketing strategy used to increase the quantity and quality of traffic from search​ engines, often by improving the​ site's position in result lists.A. Search engine optimization B. Search engine marketing C. A clickthrough rate D. Geotargeting E. Content farming ### Answers Answer: A Explanation: Discuss the customer’s role as a productive resource for the firm. Describe a time when you played this role. What did you do and how did you feel? Did the firm help you to perform your role effectively? How? ### Answers Answer: A. Customers play important productive roles especially in the creation and delivery of some repeatable services. The roles a customer plays "as a productive resource for the firm" include: 1. The customers act as some partial employees in enhancing the productivity of the firm. 2. The customers contribute to the organization by supplying their valuable time, effort, ideas, and other resources. 3. Without customers playing productive roles, some services cannot be provided to them. Sometimes, the customers actively serve themselves. A typical example is at restaurants and other self-service firms. 4. Customers suggest valuable solutions to resolve some product and service problems. B. At shopping malls, and even calling for the services of a plumber or electrician,the customer serves in many ways. She pushes the trolley around to pick the goods she requires and afterward, pushes them to the cashier for payment. She helps the plumber or electrician with repair materials or make suggestions on how to solve repair problems. C. The customer sometimes feel that the plumber or electrician would mess up the repairs without their thoughtful input. D. 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An example is participating in a customer survey for a restaurant, where the feedback provided helps shape the restaurant’s services and offerings. ### Explanation: In the context of a business, a customer can also act as a productive resource. This is often referred to as co-creation of value. It means that a customer could directly or indirectly be involved in the production process of the goods or services that they consume. This involvement could come in the form of ideas, suggestions, feedbacks, or active participation in the production process. For instance, let’s say I once participated in a customer survey for a restaurant where I frequently dine. My feedback about their menu, services, and ambience shaped their decision-making process to some extent. This made me feel valued and part of the restaurant's growth and improvement, which is a positive feeling. The restaurant helped me to perform my role effectively by encouraging feedback, implementing suggestions, and communicating subsequent changes. This reciprocal relationship benefited both me as a customer and the restaurant as a business. ### Learn more about Customer as a Productive Resource here: brainly.com/question/33598866 #SPJ11 Your tax client Chen asks whether it is likely that her Form 1040 will be audited this year. You suspect that Chen might modify the information she reports on her return based on your answer. Address Chen's question, and provide her with a justification to comply fully with the tax law's reporting requirements.About 1% of (all corporate tax returns/ all individual tax returns/ all tax returns) are audited in a given tax year. However, certain types of both taxpayers and income are subject to much higher probabilities of audit. The ethical tax professional (does/ does not) play the "audit lottery" and lower his or her reporting standards because of a perception that such actions "will not be caught." In addition, the tax professional (should/ should not) allow clients to do so. For example, the IRS has developed ways of (document matching/ maximizing income) where Treasury can determine if a transaction has been properly reported by comparing (related party information/ third party information/ yearly averages) to relevant taxpayers' returns for the year. ### Answers Answer: Fewer than 1% of all individual tax returns are audited in a given tax year. However, certain types of both taxpayers and income—including, for instance, high-income individuals, cash- oriented businesses, real estate transactions, and estate- and gift-taxable transfers—are subject to much higher probabilities of audit. The ethical tax professional does not "play the audit lottery" and lower his/her reporting standards because of a perception that such actions "will not be caught," nor should the tax professional allow clients to do so. Explanation: Fewer than 1% of all individual tax returns as well as all corporate tax return are been audited in a given tax year. However, certain types of both taxpayers and the income for example high-income individuals, cash- oriented businesses, real estate transactions, estate as well as gift-taxable transfer are often subject to much higher probabilities of audit. Furthermore the ethical tax professional does not "play the audit lottery" and lower his/her reporting standards because of a perception that such actions "will not be caught," nor should the tax professional allow clients to do so which is why thethe IRS has developed ways of document matching/ maximizing income in which Treasury can help determine if a transaction has been properly and effectively reported by comparing all related party information, third party information and yearly averages to relevant taxpayers' returns for the year. The current price of a 10 year$1000 par value bond is $1158.91. Interest on this bond is paid every 6 months, and the nominal annual yield is 14%, Given these facts, what is the annual coupon rate on this bond ### Answers When an investor holds a particular type of bond then the expected income he anticipates receiving is called the annual coupon rate. The annual coupon rate is calculated as the sum of coupon payments throughout the year divided by the par value. The annual coupon rate of the bond is 16.22%. The coupon rate can be estimated as: The following formula is used: Given, • Annual coupon payment = 162.2 • Par value of the bond=$1000

Putting values in equation:

Therefore, 16.22% is the annual coupon rate.

brainly.com/question/6959763

16.22%

Explanation:

To calculate the annual coupon rate, you can use the following formula:

Coupon Rate= (Annual coupon payment/Par value of the bond)* 100%

Annual coupon payment= $1158.91*14%= 162.2 Par value of the bond=$1000

Coupon Rate= (162.2/1000)*100%

Coupon Rate=0.1622*100%

Coupon Rate= 16.22%

The annual coupon rate on this bond is 16.22%