Question

Bigfoot Compariy has unit costs of 515 (57 vartale and st fixed) in making an internal core proceksor for its trail cameras. N supphice offiens to muke 15,500 of the core proceisor at \$6 per unit. If the offer is accepted, Bipfot will save all vartable costs but no fixed costs. Prepare ag incremental analygis compuning the costs of making versus buying the intertal core processor.

Answer 1

The student is looking for an incremental analysis to compare the costs for making an internal core processor versus buying them. The analysis includes calculating total production costs and comparing them to the external purchase offer of $6 per unit.

Step-by-step explanation:

The student is asking for an incremental analysis to compare the costs of making versus buying an internal core processor for their trail cameras. Since the company has fixed costs of $250 and variable costs that differ for each unit produced, the analysis requires calculating the total costs of production and comparing them with the offer to buy processors at $6 per unit.

For making the processors internally, we need to sum the fixed costs of $250 with the variable costs of producing 7 units: $700 for the first, $250 for the second, $300 for the third, $350 for the fourth, $400 for the fifth, $450 for the sixth, and $500 for the seventh. After calculating these costs, we compare the result with the cost of purchasing the processors externally, which is 7 units multiplied by the $6 purchase price per unit.

To analyze whether the purchase offer is more cost-efficient, the company should choose the option with the lower total cost, thus ensuring they manage their expenses effectively.