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Homework answers / question archive / Kando Company incurs a $9
Kando Company incurs a $9.00 per unit cost for Product A, which it currently manufactures and sells for $13.50 per unit. Instead of manufacturing and selling this product, the company can purchase it for $5.00 per unit and sell it for $11.60 per unit. If it does so, unit sales would remain unchanged and $5.00 of the $9.00 per unit costs assigned to Product A would be eliminated. 1. Prepare an Incremental cost analysis. Should the company continue to manufacture Product A or purchase it for resale? (Round your answers to 2 decimal places.) Make Buy $ 13.50 $ 11.60 Selling price per unit Cost per unit to make Cost per unit to buy Cost per unit not eliminated if bought Income per unit Company should Buy
Under make or buy decision making, analysis is made on whether to produce in house or purchase the product from a third Party. The althernative which involves the least cost or maximises the operating profits of the company must be selected.
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