Answer Happy

Bancroft currently manufactures a subcomponent that is used in its main product. A supplier has offered to supply all the subcomponents needed at a price of $121. Bancroft currently produces 20,400 subcomponents at the following manufacturing costs: Per unit. Direct materials $.44- Direct labor 30 Variable manufacturing overhead 39 Fixed manufacturing overhead 19 Unit cost $132 a. If Bancroft has no alternative uses for the manufacturing capacity, what would be the profit impact of buying the subcomponents from the supplier? Less Profit 163,200 b. If Bancroft has no alternative uses for the manufacturing capacity, what would be the maximum price per unit they would be willing to pay the supplier? 113 per units
c. Now assume Bancroft would avoid $324,000 in equipment leases and salaries if the subcomponent were purchased from the supplier. Now what would be the profit impact of buying from the supplier? More Profit