80,000 $ 266,000 $ 48,000 20,000 $ 65,000 $ 25,000 25,000 $ 81,000 eelens$(17,000) $120,000 $ 40,000 EX 25-7 Make-or-buy decision Eclipse Computer Company has been purchasing carrying OBJ. 1 ers at a delivered cost of $65 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 40% of direct labor cost. The fully absorbed unit costs to produce comparable carrying to be as follows: cases for its portable comput- cases are expected bon ganusuncm insen$30 25 uble 10 0$65 Direct materials wil nrese Direct labor Factory overhead (40 % of direct labor) Total cost per unit bution If Eclipse Computer Company manufactures the carrying cases, fixed factory overhead osts will not increase and variable factory overhead costs associated with the cases are xpected to be 15% of the direct labor costs. Prepare a differential analysis, dated July 19, 2014, to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. On the basis of the data presented, would it be advisable to make the carry- ing cases or to continue buying them? Explain. 002.112 BJ, 1 Make-or-buy decision