1. Make-or-Buy Decision

Companion Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $56 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 39% of direct labor cost. The total unit costs to produce comparable carrying cases are expected to be as follows:

Direct materials	$28.00
Direct labor	20.00
Factory overhead (39% of direct labor)	7.8
Total cost per unit	$55.8

If Companion Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 13% of the direct labor costs.

a. Prepare a differential analysis dated February 24 to determine whether the company should Make Carrying Case (Alternative 1) or Buy Carrying Case (Alternative 2). If required, round your answers to two decimal places. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2)
February 24
	Make Carrying Case (Alternative 1)	Buy Carrying Case (Alternative 2)	Differential Effects (Alternative 2)
Unit costs:
Purchase price	$fill in the blank e662f0fb3fe6fb1_1	$fill in the blank e662f0fb3fe6fb1_2	$fill in the blank e662f0fb3fe6fb1_3
Direct materials per unit	fill in the blank e662f0fb3fe6fb1_4	fill in the blank e662f0fb3fe6fb1_5	fill in the blank e662f0fb3fe6fb1_6
Direct labor per unit	fill in the blank e662f0fb3fe6fb1_7	fill in the blank e662f0fb3fe6fb1_8	fill in the blank e662f0fb3fe6fb1_9
Variable factory overhead per unit	fill in the blank e662f0fb3fe6fb1_10	fill in the blank e662f0fb3fe6fb1_11	fill in the blank e662f0fb3fe6fb1_12
Fixed factory overhead per unit	fill in the blank e662f0fb3fe6fb1_13	fill in the blank e662f0fb3fe6fb1_14	fill in the blank e662f0fb3fe6fb1_15
Total unit costs	$fill in the blank e662f0fb3fe6fb1_16	$fill in the blank e662f0fb3fe6fb1_17

2. Sell or Process Further

Timberland Lumber Company incurs a cost of $382 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $546 per hbf. An alternative is to produce a "finished cut" at a total processing cost of $529 per hbf, which can be sold for $760 per hbf.

Prepare a differential analysis dated August 9 on whether to Sell Rough Cut (Alternative 1) or Process Further into Finished Cut (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Sell Rough Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2)
August 9
	Sell Rough Cut (Alternative 1)	Process Further into Finished Cut (Alternative 2)	Differential Effects (Alternative 2)
Revenues, per 100 board ft.	$fill in the blank 4fee9300201f00b_1	$fill in the blank 4fee9300201f00b_2	$fill in the blank 4fee9300201f00b_3
Costs, per 100 board ft.	fill in the blank 4fee9300201f00b_4	fill in the blank 4fee9300201f00b_5	fill in the blank 4fee9300201f00b_6
Profit (loss), per 100 board ft.	$fill in the blank 4fee9300201f00b_7	$fill in the blank 4fee9300201f00b_8	$fill in the blank 4fee9300201f00b_9