ACC 561 E23-4 Vintech Manufacturing incurs unit costs of $7 ($5 variable and $2 fixed) in making a subassembly

| October 22, 2018

ACC 561 E23-4 Vintech Manufacturing incurs
unit costs of $7 ($5 variable and $2 fixed) in making a subassembly part for
its finished product. A supplier offers to make 16,400 of the part at $6.40 per
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)

Variable manufacturing costs $ $ $
Fixed manufacturing costs
Purchase price
Total annual cost $ $ $
The decision should be to .

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