1. Maplewood Company must decide whether to make or buy some of its components. The costs of producing 60,400 switches for its generators are as follows.

Direct materials		$29,596		Variable overhead		$46,508
Direct labour		42,280		Fixed overhead		59,796

Instead of making the switches at an average cost of $2.95 ($178,180 60,400), the company has an opportunity to buy the switches at $2.75 per unit. If the company purchases the switches, all the variable costs and one-third of the fixed costs will be eliminated.

a) Prepare an incremental analysis showing whether the company should make or buy the switches. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).)

				Per Unit		Make		Buy		Net Income Increase (Decrease)
		enter a number of units
				$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
				enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
				enter a dollar amount

The company should select an option ________ buy make the components.

b). Would your answer be different if the released productive capacity will generate additional income of $30,484?

If the released capacity can generate additional income of $30,484, then the company should select an option ______make purchase

the components.

2. Waterloo Co. sells product P-14 at a price of $48 a unit. The per-unit cost data are direct materials $16, direct labour $11, and overhead $16 (75% variable). Waterloo Co. has sufficient capacity to accept a special order for 35,300 units, but at a discount of 25% from the regular price. Selling costs associated with this order would be $4 per unit. Determine whether Waterloo Co. should accept the special order. (Enter loss with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)

Incremental income (loss)

$