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is CengageNOWv2lOnline ×Ye chegg study | Guided S/X -> d v2.cengagenow.com/ilrn/ta takeAssignmentMain.do?invoker= assignments&t; n Locator= assignment-take&inprogress-false; Chapter 10 Assignment Show Me How-Caklatar Print Item Make-or-Buy Decision Fremont Computer Company has been purchas ng carrying cases or its portable computers ta purcnase price of $58 per unt The company, which s current y operating be o v u capac ty charges actory overhead to p oduction at the ate of 43% o o rect labor cost unit ccats to produca comparabla carrying ases are axpected to bas followa Direct materiels Direct abor Factory overhead (43% of direct labor) Tocal cor par uni: If Fremont Computer Compeny menu ecture, the carrying cases fixed actory over eed costs wil not increase and ver able factory overhead costs assoc sted with the cases are expected to be 16% of the direct labor costs 525 21 9.03 $35.03 a. Prepare a differential analysis dated September 30 to determine whether the company should make (Alternative 1) or buy (Alternstive 2) the carrying case. If required, round your anowers to two decimal places. If an amount is zero, enter zero "0". Usea minus sign to ind cate a loa. Differential Analysis Make Carrying Case (Alt. 1) or Buy Canrying Case (Alt. 2) ber 30 Maka Carrying Caca (Atamativa 1) Caoa (Anatve 2) Dfferantal Effec on Incoma (Altamaive 2) Salas price Unizcosra Purchsse price Direct materials Diract labor ariable factory overhaad Foad factory ovarhaad Incoma (Loss b.Assuming there were no better eternative uses for the spare capacity, it would to manufacture the cerrying ceses Fixed factory overhesd is to this decision. Check My Work 2 more Check My Work uses remaining Previous Next signment Score: 17.35% All work saved. Save and Exit Submit Assignment for Erading O Type here to search 3-15 PM 12/12/2017

Explanation / Answer

Make Buy Differential effect Costs: Purchase price -58 -58 Direct materials per unit -25 25 Direct labor per unit -21 21 Variable factory overhead per unit -3.36 3.36 Fixed factory overhead per unit -5.67 -5.67 0 Income (Loss) -55.03 -63.67 -8.64 Assuming there were no better alternative uses for the spare capacity, it would be advisable to manufacture the carrying cases. Fixed factory overhead is irrelevant to decision

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