equipment 500 depreciation of building 250 supervisory salaries 300 the company has an offer from duvall valves to produce the part for $2,000 per unit and supply 1,000 valves (the number needed in the coming year). if the company accepts this offer and shuts down production of valves, production workers and supervisors will be reassigned to other areas. the equipment cannot be used elsewhere in the company, and it has no market value. however, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $55,000 per year. what is the incremental savings of buying the valves? (the answer should be stated in a per-unit format and is a positive number)

Question

27-10-2022
Business

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equipment 500 depreciation of building 250 supervisory salaries 300 the company has an offer from duvall valves to produce the part for $2,000 per unit and supply 1,000 valves (the number needed in the coming year). if the company accepts this offer and shuts down production of valves, production workers and supervisors will be reassigned to other areas. the equipment cannot be used elsewhere in the company, and it has no market value. however, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $55,000 per year. what is the incremental savings of buying the valves? (the answer should be stated in a per-unit format and is a positive number)

Answer :

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tutorconsortium112 tutorconsortium112 · Answer 1 · 2022-11-03T23:51:26-04:00

Savings per unit incremental = $215 Direct material cost plus direct labor cost plus variable overhead cost plus equipment depreciation cost equals the cost of creating the valve. According to the stated question, the relevant cost of producing the good is calculated as follows: (940 + 600 + 300) x 1000 = 250.

What are the added savings?

Depending on when the savings are considered to "start," incremental savings refers to the additional resource savings owing to activities procured during a specific reporting period.
To calculate incremental revenue, follow these steps:
Find out how many units were sold during a time of expansion.
Calculate the cost per unit sold during a period of expansion.
Add the price per unit to the number of units.
Revenue growth is the end consequence.

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