Mo-kan company incurs a 6 per unit cost for product a which

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Reference no: EM13592221

Mo-Kan Company incurs a $6 per unit cost for Product A, which it currently manufactures and sells for $9 per unit. Instead of manufacturing and selling this product, the company can purchase Product B for $5 per unit and sell it for $8 per unit. If it does so, unit sales would remain unchanged and $5 of the $6 per unit costs assigned to Product A would be eliminated.

1.	Prepare Incremental cost analysis.

Incremental cost analysis
Costs of purchasing:
Cost to purchase Product B	$
Revenue loss from reduced price

Total cost of purchasing Product B
Costs eliminated if Product B purchased

Net incremental cost of purchasing Product B	$

Reference no: EM13592221

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