| Brief Exercise 23 4 |
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Vintech Manufacturing incurs unit costs of $6($5variable and $1fixed) in making a subassembly part for its finished product. A supplier offers to make13,600of the part at $6.30per unit. If the offer is accepted, Vintech will save all variable costs but no fixed costs.
Prepare an analysis showing the total cost saving, if any, Vintech will realize by buying the part.
(If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. 15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)
| Make | Buy | Net Income Increase (Decrease) |
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| Variable manufacturing costs | $ |
$ |
$ |
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| Fixed manufacturing costs | |
|
|
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| Purchase price | |
|
|
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| Total annual cost | $ |
$ |
$ |
| The decision should be tobuy the partmake the part. |