Gilberto Company currently manufactures 87,000 units per year of one of its crucial parts. Variable costs are $3.05 per unit, fixed costs related to making this part are $97,000 per year, and allocated fixed costs are $84,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Gilberto is considering buying the part from a supplier for a quoted price of $4.25 per unit guaranteed for a three-year period. Required:
a. Calculate the total incremental cost of making 87,000 and buying87,000 units.
b. Should the company to manufacture the or should it buy the part from the outside suppller?

Vortex company operates a retail store with two departments. information about those departments follows. department a department b sales $ 800,000 $ 450,000 cost of goods sold 497,000 291,000 direct expenses salaries 125,000 88,000 insurance 20,000 10,000 utilities 24,000 14,000 depreciation 21,000 12,000 maintenance 7,000 5,000 the company also incurred the following indirect costs. salaries $36,000 insurance 6,000 depreciation 15,000 office expenses 50,000 indirect costs are allocated as follows: salaries on the basis of sales; insurance and depreciation on the basis of square footage; and office expenses on the basis of number of employees. additional information about the departments follows. department square footage number of employees a 28,000 75 b 12,000 50 required: 1. determine the departmental contribution to overhead and the departmental net income for department a and department b.