Q34 Metlock Firm is considering whether to outsource the manufacture...
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Accounting
Q34
Metlock Firm is considering whether to outsource the manufacture of subcomponent JXY. The accounting department provides the following cost information for manufacturing 10,900 units of subcomponent JXY per month $39.200 30.800 Direct materials costs Direct labour costs Variable overhead Fixed overhead 14,100 13,600 *Fixed overhead includes $4,900 supervisor's salary International Firm agrees to supply Metlock with 10.900 units per month for a total cost of $131,700. If subcomponent JXY is outsourced Metlock will be able to increase the production and sales of its final product by 1.200 units per month; the product is sold for $115 per unit and its average variable costs per unit are $85. The supervisor's salary will be eliminated if subcomponent JXY is outsourced. Prepare an incremental analysis for subcomponent JXY. (If an amount reduces the incremental costs then enter with a negative sign preceding the number eg.-15,000 or parenthesis, eg. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) Incren (Savi Make Buy $ $ $
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